So Many Details With Storms: Is your storm damage tax deductible?
If your commercial property has been damaged by a storm, you may want to know whether the cost of the damage is tax-deductible. Unrecoverable losses caused by storms or natural disasters are usually deductible, as long as these damages are proven and will not be reimbursed by insurance. Here are three steps you can take to find out whether you can deduct the cost of storm damage from your tax bill.
3 Steps to Find Out if Storm Damage is Tax Deductible.
- Determine how much damage your insurance covers. If your business is insured, you can only deduct damage that exceeds your coverage or was not covered for other reasons. Owners of uninsured commercial property can deduct the total cost of storm damage. Consult IRS Publication 547, Casualties, Disasters, and Thefts, to read the rules for claiming these deductions.
- Check to see if a storm or disaster is a Presidential Declared Disaster. If you are dealing with storm damage in a region that has been federally recognized as a disaster area, special filing options may apply to your situation. Check the IRS's list of tax relief in disaster situations to see if your locality is listed and find out about any assistance that is available.
- Distinguish between actual property loss and deductible property loss. Actual property loss is your total loss as the owner of a commercial property. Deductible property loss is based on the current value of your property and factors in all reductions. If you are unsure about reductions involved in a commercial property, you should contact an accountant.
If you have unrecoverable storm damage at your commercial property, you should see if you can deduct any damage from your tax bill. Tax deductions cannot overlap with covered losses, but these deductions can help to offset the cost of professional damage restoration if your property is uninsured or underinsured.