Losses; Declared Disaster Area

Yes, the $2000 you paid is deductible as a casualty loss, but subject to the 10% of AGI plus $100 rule. Don't forget to deduct the change in FMV of your home. I don't know if Congress ever lowers the 10% rule in disaster areas (for example, saying that amounts above 5% of your AGI are deductible), so check with a local tax preparer. Just to be sure, the $2000 that you paid must be for repairing casualty loss, not for something like fixing a damaged roof.

See page 5 of the publication 547

Example. Your home was extensively dam- aged by a tornado. Your loss after reimburse- rent from your insurance company was $10,000. Your employer set up a disaster relief fund for its employees. Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. You received $4,000 from the fund and spent the entire amount on repairs to your home. In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. Your casualty loss before applying the deduction lim its (discussed later) is $6,000.