When water damage is a casualty loss

February 15, 2008

Water leaked through the windows in my finished basement, damaging the wallpaper, wallboard, and carpeting. Since my homeowners policy won't cover this, can I claim it as a casualty loss on my tax return?

Water leaked through the windows in my finished basement, damaging the wallpaper, wallboard, and carpeting. Since my homeowners policy won't cover this, can I claim it as a casualty loss on my tax return?

Only if the damage resulted from a sudden, destructive, or unusual event like a flood or storm. If it took place gradually, you're out of luck. And even if your loss does qualify, you can't deduct the full amount; you must subtract $100 plus 10 percent of your adjusted gross income.

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