Is the IRS offering tax relief for Ian losses?
Dear Mr. Feichthaler:
I am sure I am one of many that have this issue: I sustained significant damage to my home during Hurricane Ian, and my insurance appears to be reimbursing very little of the expense of repair. April 15 will be here before we know it. Is the IRS offering any tax relief for these losses?
— Dee I.
To varying levels, nearly everyone in Cape Coral has sustained some sort of damage from the hurricane. Coupled with inflation, it is a very difficult time for thousands of residents. The IRS has declared our city a federal disaster area, which provides for several benefits. One of them is potential income tax relief.
Taxpayers can deduct casualty losses. Although application and numbers can vary, losses from a sudden unexpected event (like a hurricane) can be deducted from income. The calculation of what amount can be deducted, like everything else with the IRS, is complicated.
There is also the possibility of taking a full deduction for the reduction in value of the property as a result of the hurricane. Given the level of damage many people have sustained, and the general decline in real estate values over the past four months, this could lead to substantial income tax savings as well. For some residents, this relief may result in no income tax payable for 2022. Also, there is the potential to claim the loss in 2021 instead of 2022, since this is a federal disaster area. If your income was a lot higher in 2021, this could lead to even more tax savings.
As we all know, dealing with tax rules can be daunting, and making mistakes that lead to dealing with the IRS can be incredibly stressful. If you believe you are eligible to take advantage of the casualty loss rules, I encourage you to contact an attorney or Certified Public Accountant to review your situation. Hopefully this is a bit of good news for you.
Eric P. Feichthaler has lived in Cape Coral for over 35 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Museum of History, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at email@example.com, or 239-542-4733.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.