*** UPDATE ***
As of now, the IRS has not designated Hurricane Ian as a Qualified Disaster, as everyone thought they would. We still have hope that the governor and congress will make this happen, but it has not happened yet. If they do not identify Hurricane Ian as a Qualified Disaster then all losses will be reduced by 10% of AGI and you will have to itemize to get the deduction, resulting in thousands of dollars not being able to be deducted on the tax return.
We strongly suggest that you reach out to the governor and your local representative to help lobby for the designation.
Generally, you may deduct casualty and theft losses relating to your home, household items, and vehicles on your federal income tax return if the loss is caused by a federally declared disaster.
You may not deduct casualty and theft losses covered by insurance, unless you file a timely claim for reimbursement and you reduce the loss by the amount of any reimbursement or expected reimbursement.
If your property is personal-use property or isn't completely destroyed, the amount of your casualty loss is the lesser of:
•The adjusted basis of your property, or
•The decrease in fair market value of your property as a result of the casualty (normally needs an appraisal)
You may deduct the loss on either your 2021 or 2022 tax return
The Internal Revenue Service issued safe harbor methods that individuals may use in determining the amount of their casualty and theft losses for their homes and personal belongings, including losses from recent hurricanes.
Below you will find a brief description of each of the available methods.
If losses are under $5,000 all you need is a good-faith estimate to take the deduction on your tax return.
If losses are under $20,000, you may use the lesser of two repair estimates prepared by two separate and independent contractors to take the deduction on your tax return.Note: you do not have to make the repairs just have proof that there was a loss.
You can use the reports prepared by your homeowners’ or flood insurance company to prove loss.The amount of loss for your tax return is the total loss minus any money received by the insurance company.Normally this is your deductible.
An individual may use an appraisal prepared for the purpose of obtaining a loan of Federal funds or a loan guarantee from the Federal Government.Normally, SBA Disaster Loan.
You may also use the contract price for the repairs specified in a contract prepared by an independent contractor.
*** UPDATE ***
It looks like the IRS is not going to allow the Cost Index Safe Harbor for any hurricanes past Hurricane Irma. Although this hurricane was one of the worst in recent history and congress could still allow us to use it, the general consensus is that they have retired this part of the code.
If you had damage to your personal home, you can use the below per square foot cost index below to figure out your total loss.
For a detail definition of category below please see: https://www.irs.gov/pub/irs-drop/rp-18-09.pdf
Less than 1,500 sq/ft – $8 per sq/ft
More than 1,500 / Less than 3,000 sq/ft – $8 per sq/ft
More than 3,000 sq/ft – $7 per sq/ft
$29 per sq/ft
Less than 200 sq/ft – $71 per sq/ft
More than 200 / Less than 400 sq/ft – $56 per sq/ft
More than 400 sq/ft – $50 per sq/ft
15% - 25% of the home – $202 per sq/ft
26% - 50% of the home – $186 per sq/ft
51% - 100% of the home – $168 per sq/ft
Less than 1,500 sq/ft – $146 per sq/ft
More than 1,500 / Less than 3,000 sq/ft – $125 per sq/ft
More than 3,000 sq/ft – $116 per sq/ft
Less than 1,500 sq/ft – $190 per sq/ft
More than 1,500 / Less than 3,000 sq/ft – $166 per sq/ft
More than 3,000 sq/ft – $154 per sq/ft
Less than 1,500 sq/ft – $235 per sq/ft
More than 1,500 / Less than 3,000 sq/ft – $208 per sq/ft
More than 3,000 sq/ft – $193 per sq/ft