The IRS is offering some relief for taxpayers with defective imported drywall in their homes. Drywall produced in China has been linked to a rotten egg smell and corroded metal components in homes across the U.S. The Consumer Product Safety Commission (CPSC) has received nearly 4,000 reports from residents in 39 states about problem drywall.
The IRS is allowing homeowners to treat damages from the drywall as a deductible casualty loss. A casualty loss deduction is generally the total of your unreimbursed loss reduced by $100 ($500 for 2009) and further reduced by 10% of your adjusted gross income. You have time itemize to claim a casualty loss.
Here's how it works:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
--Damages had to occur from imported drywall installed in homes between 2001 and 2009.
--To be considered "corrosive," drywall must meet the CPSC's two-step identification method.
--Taxpayers can claim unreimbursed amounts paid to repair damage to their homes or appliances as a casualty loss.
--The loss must be claimed for the year payments were made. Taxpayers who already filed a return for that year have three years to file an amended return.
--If a taxpayer has a pending insurance claim (or plans to seek reimbursement), the taxpayer may claim a loss for 75% of the unreimbursed amount paid.
--Taxpayers who have been fully reimbursed for repairs may not claim a loss.
Here's an example of how the deduction works: Say you paid $10,000 in 2009 for the drywall repairs, none of which was reimbursed by insurance. You reduce that amount by $500 to get $9,500. Then reduce that amount by 10% of your adjusted gross income. If your AGI is $75,000, 10% is $7,500. You’d subtract $7,500 from the $9,500 to get $2,000. You can deduct $2,000.
For more information about claiming drywall damage as a casualty loss, see Revenue Procedure 2010-36.
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
Embracing Generative AI for Financial SuccessGenerative AI has the potential to reshape how we approach learning about and managing our personal finances.
-
What Is a Qualified Charitable Distribution (QCD)?
Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
New Law Delivers Tax Breaks to Natural Disaster Victims, But Is It Enough?Tax Relief The legislation provides critical tax relief to thousands of natural disaster victims across the country.
-
Five Tax-Savvy Ways To Donate This Holiday SeasonCharitable Donations Food pantries, toy drives, and animal sanctuaries are popular ways to support others year-round.
-
Can Tariffs Make Childcare More Affordable?Tariffs President-elect Trump suggested tariffs can address the childcare crisis, but economists are doubtful.
-
Are You a Renter? You Could Save on TaxesTax Breaks With these tax savings at your fingertips, rent may be more affordable
-
2025 Open Enrollment: Some DACA Recipients Can Purchase Affordable Care Act Health InsuranceOpen Enrollment Your eligibility to purchase health insurance from the federal marketplace may have changed. Here's what you need to know.
-
Holiday Shopping Tax Tips for Business OwnersTax Deductions Before hitting the sales, businesses should know these key deductions and look out for overspending.
-
NYC Congestion Pricing: Ghost Tax or Necessary Fee?State Taxes Drivers headed to Manhattan’s downtown district will face a new $9 toll in January.
