Tax Code Can Help Theft, Disaster Victims

02/12/2010

With many Americans now focused on getting their tax returns together, it's useful to remember that people who have had to file certain homeowner insurance claims may also be eligible for deductions for their losses.

For those who are victims of theft from their homes or vehicles, the IRS allows a deduction for the value of such losses. A person who has homeowner insurance is required to file a timely claim and must then reduce their reported loss to the IRS by the amount they receive in reimbursement from their insurer.

The IRS also allows deductions for people who lose or sustain damage to property as the result of a natural disaster, a scenario that has been especially common in the past several years.

Taxpayers are cautioned that they are not permitted to write off property losses that are the result of natural wear and tear, or damage from insects like termites.

While the tax code does provide a certain level of financial protection for people who are victims of theft or natural disasters, it hardly comes close to the protection offered by a good homeowner or renters insurance policy.

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