We've all seen on the news that large portions of the country have been devastated by tornados and floods. Unfortunately, homeowners are not always fully insured -- or insured at all -- against losses due to such events. Fortunately, the Internal Revenue Service can help because uninsured casualty losses are tax deductible.
What is a casualty?
A "casualty" is damage, destruction, or loss of property due to an event that is sudden, unexpected, or unusual. Deductible casualty losses can result from many different causes, including, but not limited to:
- Government-ordered demolition or relocation of a building that is unsafe to use because of a disaster,
- Sonic booms,
- Storms, including hurricanes and tornadoes,
- Terrorist attacks,
- Vandalism, including vandalism to rental property by tenants, and
- Volcanic eruptions.