Tax Tips for Storm Damage Expenses

10/10/2019 (Permalink)

Insurance building blocks.

"When a natural disaster leaves your home or business with storm damage, the cost of restoration can be daunting. Ideally, your insurance is sufficient to cover your losses. If it is not, however, you may be able to deduct some of the expenses from your taxes. Here are some tips to help you determine if you qualify for tax breaks after a storm.
Declaration of Disaster
Damage to your property is likely to be tax deductible if it happens as the result of a federally declared disaster. Watch the local weather station for clues that a storm is severe enough to warrant federal assistance:

Storm is given a name
President declares state of emergency
Residents are advised or required to evacuate

A declaration of a natural disaster lends credence to your damage claims. Not only are you more likely to be able to deduct excess expenses from your taxes, you may even qualify for federal aid. 
Rules for Residential Property
If your home has storm damage and your homeowners insurance doesn't cover all the repairs, you may be able to list part of the expenses as one of your itemized deductions. The amount you can deduct depends on your income. You can use an online calculator to make sure that you are deducting the correct amount.
Rules for Commercial Property
When it comes to deductible damage expenses, commercial property owners are not bound by the same constraints as homeowners. Income is not a factor, and you can deduct expenses even if you do not usually itemize deductions on your return. You may even be able to take the deduction on the year in which it will save you the most money.
Your storm insurance is designed to cover any storm damage your home or business sustains, but it may have limits. Talk to your accountant to see if your extra expenses can be deducted from your taxes."