For nonbusiness assets, you can deduct casualty losses from sudden usual events (storms, fires, etc.) once those losses exceed 10 percent of your adjusted gross income (AGI). Also, you can't write off the first $100 per event. Here are some tips to expand your write-off:
Develop a tax picture of your assets. Take photographs or videotapes of your home and all other nonbusiness assets. This is your best proof of the existence and condition of assets prior to a casualty. Don't forget to update your photos when you make home improvements or buy an expensive item. Store the evidence in a safe-deposit box. Note: The cost of photos or videotapes is deductible as a miscellaneous expense.
Clean up on deductions for cleanup costs. The best way to determine the fair market value of damaged real estate is to obtain an independent appraisal. Key point: Make sure the appraiser documents damaged trees and shrubs. If you replant them, the cost required to restore the property is deductible. If you don't replace the damaged greenery, the cleanup costs are deductible. Normally, you can't deduct cleanup expenses due to a casualty. Note: You can deduct the appraisal as a miscellaneous expense.
Convert nonbusiness assets into business property. Good news: You can deduct 100 percent of damage to business property, no deductible or percentage limitation. One smart move: Suppose you crash your family car on an icy road this winter and rack up $6,000 in unreimbursed damage. Use the damaged car for business driving and switch your business car to personal use. That entitles you to a partial business casualty loss deduction, based on your business mileage percentage for that year.
- Small Business Tax Deduction Strategies No matches