Many local residents and Harbor clients were affected by the floods last fall, some with multiple properties. While many received relief in the form of FEMA and insurance reimbursement payments, most property owners have out of pocket losses. For those in this situation there are several tax related planning items that are worth looking into. If you suffered losses you have the right to deduct unreimbursed casualty losses on your tax return. Damage to your property (structure, grounds, infrastructure, etc.) is important to capture as is a reduction in the overall value due to damage in the area around you. Because we were declared a federal disaster area, the IRS is allowing a casualty loss for 2012 via an amended return or a deduction in 2013. It may be beneficial to amend your 2013 return if your deductions or income for that year would allow for a more beneficial deduction.
There are limitations to the loss deduction. You must have suffered a loss in value that exceeds 10% of your income to all of your property. The same would be true for commercial property. While this limitation will eliminate the benefit for many higher income taxpayers, it is certainly worth discussing with your accountant. Last, these deductions are timely and best handled by a qualified tax preparer.