Owning a home is the American pain. I mean dream. Wait, no. I mean pain.
Don't get me wrong. The hubby and I have been homeowners most of our married life. We bought a small condo in suburban Maryland soon after we were married and over the year bought and sold four other homes.
We loved each of our houses; still love the one we're in. But we also hated the upkeep and repairs that come with every home, including the one we're in.
Then there are the catastrophic cases where we've had to call on our property insurer for help, like back in the fall of 2004 when our Florida house was in the path of two hurricanes within three weeks. In these kind of disasters, homeowners also might be able to get some help from the IRS in th form of a casualty deduction.
Not an automatic write-off: There are, of course, some limitations to such tax help. Your tax break isn't a dollar-for-dollar write-off of your loss amount.
Regardless of whether your loss is from a major disaster, like a hurricane, or some other "run of the mill" incident (more on this in a minute), if you have insurance, you must take that into account. You have to subtract any coverage payments you receive from your loss amounts.
Then you do the calculations to see just how much of a deduction you can claim on your Form 1040 Schedule A.
The event that caused your loss also must meet certain IRS standards to be classified as a deductible loss. Specifically, the loss you incur must be from the complete or partial destruction of property resulting from a sudden, unexpected and unusual identifiable event.
What qualifies: Natural wear and tear on a property doesn't qualify. Taking care of things like damage to woodwork because you didn't paint as regularly as you should have is just one of the many, and sometimes expensive, joys of homeownership that you just have to cover all on your own.
But property loss from plenty of other unwelcome occurrences qualify, such as:
Fires, either started by, for example, an electrical short or a lightning strike;
Storms, such as tornadoes, ice, hurricanes and the like;
Floods or, in some cases, droughts; and
Earthquakes and mudslides.
Even burglaries, thefts and vandalism could get you some tax help from Uncle Sam.
And now, thanks to the involvement of four Congressmen, so might property losses caused by a type of imported drywall used in some U.S. homes.
Arguing for drywall damage deduction: Virginia's two U.S. Senators, Jim Webb and Mark Warner, along with their fellow Old Dominion State federal legislator Rep. Glenn Nye and U.S. Sen. Bill Nelson from Florida, say that thousands of their constituents have suffered costly property damage due to the dangerous effects of Chinese drywall used in their homes.
And these homeowners, some of whom have been forced to relocate and pay those costs in addition to the mortgages on their tainted houses, should be able to claim those associated losses as casualty tax deductions, argue the four Democratic lawmakers.
They made their case in a letter they sent last month to the IRS. Floyd Williams, national director of IRS Legislative Affairs, wrote back that the IRS might indeed allow such claims, depending upon the outcome of the investigations by some other federal agencies.
Drywall's unexpected damage: You may have seen the stories on the questionable drywall. The Chinese-made construction product reportedly emits putrid odors that have, based on consumer complaints, cause irritated and itchy eyes and skin, difficulty breathing, bloody noses and headaches.
The noxious fumes also are cited by homeowners with corroding their structures' pipes and electrical equipment, as well as damaging the workings of air conditioners and other appliances. A main fear here is that the corrosion could lead to fires.
The U.S. Consumer Product Safety Commission (CPSC) has received complaints about the questionable drywall from more than 600 property owners, mostly from residents of Florida, Louisiana and Virginia.
But property owners in Alabama, Arizona, California, Georgia, Indiana, Kentucky, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Tennessee, Texas, Washington, Wisconsin, Wyoming and the District of Columbia also have reported problems they say are associated with the Chinese-made drywall.
Lab results could mean tax deduction: In response to the complaints, the CPSC, Environmental Protection Agency (EPA) and other federal agencies are collecting samples of the drywall from affected homes. Lab analysis is expected to be completed my mid-September.
The results of these studies could prompt the IRS to allow casualty loss claims by the affected homeowners.
"If it is determined that Chinese-made drywall emits an unusual or severe concentration of chemical fumes that cause the extreme and unusual damage you [the Members of Congress] describe, affected taxpayers can qualify for a casualty loss deduction," wrote Williams.
"For those who have been affected by these harmful materials, this news will give them some financial relief," said Webb in announcing the IRS reply. "I look forward to hearing more from the U.S. Consumer Product Safety Commission on how to remedy this problem and prevent it from happening in the future."
More property loss deduction info: If you own a home and you suspect you have the allegedly tainted drywall, contact the CPSC if you haven't already. Then stay tuned for IRS word on whether it will let you the tax laws to help repair your property.
And don't miss this post on Financial and tax tips for storm season.