The Tax Cuts and Jobs Act changed the tax treatment of property damage caused by floods and other natural disasters. Florida residents may only be able to claim a deduction for damage that occurs during a federally recognized disaster. Hurricanes and other tropical storms can cause damage throughout a large portion of the country. In July 2019, Hurricane Barry made landfall in Louisiana but caused flooding in portions of New York state.
To claim losses related to property damage on a tax return, the cost of repairs must be more than 10% of a claimant’s adjusted gross income. Furthermore, only losses that were not reimbursed by an insurance company are eligible to be claimed as an itemized deduction. In some cases, homeowners won’t be entitled to a property damage deduction because they will choose to take the standard deduction instead.
The standard deduction is $12,200 for a single filer and $24,400 for a married couple filing jointly. Instead of hoping to recoup financial losses caused by a storm at tax time, it may be best to prepare before a storm hits. This can be done by creating or bolstering an emergency fund that can be used to pay a hurricane deductible or other costs not covered by an insurance policy.
The cost to repair window or roof damage caused by a hurricane, flood or another natural disaster may be covered by an insurance policy. Homeowners are encouraged to file claims promptly and have as much evidence to support their claims as possible. If a claim is denied, an attorney may work with a policyholder to appeal the insurance company’s decision. An attorney could also help review a policy to ensure that a homeowner is making a valid claim.