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 declared by the President.

What is a casualty loss for tax purposes?

For tax purposes, a “casualty” is damage, destruction, or loss of property due to an event that is sudden, unexpected, or unusual. Examples include: earthquakes. fires.

What is a casualty or theft loss?

A casualty and theft loss is one caused by a hurricane, earthquake, fire, flood, theft or similar event that is sudden, unexpected or unusual. You can deduct a portion of personal casualty or theft losses as an itemized deduction.

What tax form do you fill out for casualty loss?

Form 4684
Use Form 4684 to report gains and losses from casualties and thefts. Attach Form 4684 to your tax return.

Who is eligible for the casualty loss tax deduction?

Tax reform drastically limited who can claim the casualty-loss tax deduction for personal losses. Now, only taxpayers whose personal losses occur in a federally declared disaster area may be eligible to claim a casualty-loss tax deduction.

What does casualty loss mean on property taxes?

For personal-use property like a home or car, or for other property that is only partially destroyed (the roof is gone but the walls are still standing), your casualty loss is either the adjusted basis of the property or the decrease in fair market value of the property as a result of the damage, whichever is less.

What is the adjusted basis of a casualty loss?

For business or income-producing property that is completely destroyed, your casualty loss is the adjusted basis of the property, and for theft, the casualty loss is typically the adjusted basis of the property. What is adjusted basis and fair market value?

What’s the difference between a theft and a casualty?

This publication explains the tax treatment of casualties, thefts, and losses on deposits. A casualty occurs when your property is damaged as a result of a disaster such as a storm, fire, car accident, or similar event. A theft occurs when someone steals your property.