What is Personal casualty loss?
In short
Individuals can deduct personal casualty and theft losses, such as damage from a storm, only if the loss comes from a federally declared disaster. Each loss is reduced by $100, and the total by 10% of adjusted gross income.
Key takeaways
- The loss is the lesser of the decline in fair market value and the property's adjusted basis, minus insurance recovered.
- Disaster losses can be claimed on the prior year's return to get a refund sooner.
- Business casualty losses are fully deductible, without these limits.
Example
A $30,000 uninsured disaster loss with adjusted gross income of $100,000: $30,000 − $100 − $10,000 = $19,900.
Where it's tested
REG: Individual Taxation: Adjustments & Deductions — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under the One Big Beautiful Bill Act, what is the state and local tax (SALT) deduction cap, and is it permanent?