Suffered a house fire last year. Manufactured home, actually. I didn't own it, but I lost everything inside ... stereo equipment, large book collection, old records, clothing, maybe $2,000 worth of stuff.
Am single, about $18,000 income, no dependants, no deductions, always use the 1040ez.
Can Form 4684 do me any good, and which 1040 form would I have to file to use it, please. Any advice is appreciated.
Thank you, people.
Chris
The rule with casualty losses is that you can deduct the amount of the casualty larger than 10% plus $500 of your AGI, which is about $2300 for you. In addition, you have to itemize deductions in order to take advantage of casualty deduction. With an income of 18k you're likely to take the standard deduction of $5750.
There might be special rules if your home was in a disaster area.
Assuming the loss is actually 2000, and it might be a lot lower for tax purposes, it is first reduced by 10% of Adjusted Gross income then by $500.
Assuming 18,000 AGI, you reduce your loss by 1800 and then by 500 and you have nothing left after that.
Even if you are in a disaster area where the 10% reduction does not apply but the 500 does, you would still have to come up with 5700 - 15004200 of schedule A other deductions before you could profitably file schedule A.
Note, the rule Art mentions for losses in Presidentially declared disaster areas only applies if the casualty loss was caused by the event that led to the President's declaration.
What do you mean by "might be a lot lower for tax purposes"?
In my experience many taxpayers believe the loss equals the replacement cost of the property. For tax purposes we start with the difference between the FMV just before and just after the casualty.
If the casualty is a total loss, FMV after is $0. If the taxpayer buys a replacement, FMV of the replacement is clearly its cost; if it's the same as the thing lost, then FMV of the thing lost was the same. (I'm assuming an ordinary purchase at the best available price of a similar/identical (used) item.)
Seth
In speaking with real estate appraisers, that's not what they tell me.
We are talking about a "house fire" here. Even if a house is completely destroyed, the land still remains. The fair market value of land that had held a house (with a substantial value) will always be something, never nothing at all.
Obviously, you're not in California, where the land itself can be damaged! ;-)
OP didn't own the home, but referred to the loss of "everything inside". Typically, the land is outside the home. I realize that things may differ in California.
Seth
unless, for example, there are toxics on the land, which will cost a lot to clean up.
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