You can generally deduct casualty losses related to your home, household items and vehicles if the loss is caused by a federally declared disaster. Deductions are subject to limits and must be unreimbursed. Taxpayers must show the change in the property’s value before and after the damage. One married couple claimed a nearly $740,000 casualty loss deduction for storm damage to their vacation home and boat, but they didn’t provide an appraisal to show the change in property value. They submitted repair receipts for $250,875, but later admitted that $51,600 of the expenses was for home improvements. The U.S. Tax Court denied the deduction and added penalties. (TC Memo 2023-43)
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