What Property Damage Is Tax Deductible?

3/4/2020 (Permalink)

As a business owner, you should be prepared for all situations

If you have sustained storm damage following a tornado, hurricane, or other severe weather event, you may qualify for tax deductions that can help you offset losses that aren’t covered by your insurance policy. Some insurance policies don’t cover all forms of property damage, such as losses due to floods. Other insurance policies may have a cap on the benefits they provide, which can leave you on the hook for the rest of the costs. In this situation, tax deductions can help you offset some of the costs of repairs.

Covering Losses From Natural Disasters

Some forms of property damage may be tax deductible. A few of the most prominent examples include:

• Earthquakes
  
• Floods
  
• Blizzards
  
• Tornadoes
  
• Hurricanes
  
• Wildfires
  
  

In contrast, losses that develop due to accidents and deterioration in Buckingham, PA, are not eligible for a deduction.
In addition, if your property is covered by an insurance policy, you cannot claim a tax deduction, even if you do not file a claim. Therefore, if your insurance company covers the cost of repairs, you should take the reimbursement allowed under your policy. Do not forgo this reimbursement in favor of the tax deduction. This is not allowed.

Claiming Deductions for Property Damage

If your insurance policy does not cover your property damage, you may be able to claim a tax deduction. This damage needs to be itemized. Additionally, the rules for claiming commercial storm damage are different from residential damage. In general, the guidelines are more lenient for commercial property destruction. For starters, there is no limit to what you can claim for commercial damage. Some of the most common deductions include the cost of commercial building restoration services, mold remediation, and water damage repair.

Planning Appropriately for Storms

As a business owner, you should be prepared for all situations. The first step may be creating a plan for how to deal with property damage in Buckingham, PA, that isn’t covered by your insurance policy.