| Did You Incur a Casualty Loss Between 2022-2025 |
With hurricane season underway, it’s a good time to revisit the casualty loss deduction rules — especially since they’ve changed significantly in recent years. Here’s what you need to know about when and how losses related to natural disasters can be deducted on your tax return. |
| ✅ Who’s Eligible For 2018 through 2025, individuals may deduct personal casualty losses on personal-use property (like homes, vacation properties, or cars) only if the loss resulted from a federally declared disaster. Losses on business or rental property aren’t subject to this restriction and may still be deductible even without a federal disaster declaration. |
| ⚖️ Key Limitations Even when a loss qualifies: -Each event must be reduced by $100 -The total loss for the year is deductible only to the extent it exceeds 10% of your adjusted gross income (AGI). |
| 🌟 Qualified Disaster Losses – Special Rules Some federally declared disasters qualify for enhanced relief: -The per-casualty reduction increases to $500 -The 10% AGI rule does not apply -You can choose to itemize or increase your standard deduction by the loss amount -You can elect to claim the loss in the prior tax year to speed up your refund |
| 🆕 Coming in 2026 Starting in 2026, the rules will expand to include state-declared disasters if the Treasury Secretary determines the event was sufficiently severe. This means more taxpayers will qualify for relief when facing major weather or regional disaster events. |
| 🔎 How to Confirm If Your Loss Qualifies Recent qualified disasters include: 🌪️ Hurricanes Milton, Helene, Ian, and Nicole 🔥 The California wildfires To confirm your event is on the list, visit the IRS Disaster Relief Listing or check FEMA’s Disaster Declarations Map. |
| 📅 When to Claim the Loss You generally claim the loss in the year it occurred. If there’s a reasonable prospect of reimbursement (for example, pending insurance claims), you must wait until it’s clear that no further reimbursement will be received. At that point, you can claim the loss in the year it becomes certain. |
| 🏢 For Condo or HOA Owners If your condo or HOA assessed members to repair storm damage, your share may be deductible — but only if: -You must, as a member of the association, own the common areas that are being repaired, as tenants in common. If the common elements are owned by the homeowner’s association, you can’t claim a casualty loss for the assessment -.The assessment covers repairs only (not improvements or upgrades). Ask your association for documentation confirming these details before claiming a deduction. |
| 💡 Bottom Line The casualty loss rules are now more favorable for taxpayers affected by qualified disasters, offering higher deduction limits and greater flexibility in how and when losses are claimed. If you experienced a loss or received a special assessment related to a natural disaster, we’re here to help you determine eligibility and ensure it’s properly reported. |
| 📞 Contact your Insight team member if you’d like us to review your situation. |
Did You Incur a Casualty Loss
