Tax Relief for Storm Damage

4/3/2020 (Permalink)

Call SERVPRO after storm damage in Flourtown, PA

Tax Relief for Storm Damage

If your commercial property in Flourtown, PA, has storm damage, it may cost a lot to repair the damage, replace ruined items and restore the building to a functional state. Your flood policy likely covers a large portion of the cost of flood mitigation services, but what about the inevitable out-of-pocket costs? It is likely that you are able to write off at least some of the costs when you file your next tax return. Here are three tips to help you do so.

1. Check Disaster Declaration

Whenever there is a large-scale storm, such as a tornado or hurricane that covers a wide area of the country, the President will often declare the areas affected as disaster areas. This declaration helps business owners with part of the eligibility verification. You may also be able to file under whichever recent year gives you the best tax break. A list of federally declared disaster areas is frequently updated on the FEMA website.

2. Know Property Value

The amount of out-of-pocket expenses you are able to deduct for storm damage may depend on the value of your property. With most losses, you calculate the amount based on either the tax basis or fair market value of your building, whichever is smaller. The tax basis is usually the amount you originally paid for the property, whereas the fair market value is its current appraisal. Your tax accountant can help you navigate whether this information is needed when you are calculating your tax deductible expenses.

3. Prove Property Ownership

In order to get a tax break for damage, you must own the property. If you rent your office space, therefore, you are not eligible for this particular tax break. The burden of proof of property ownership is on the filer.
Storm damage can be expensive to repair, even if you have flood insurance. You may be able to get some tax relief to ease the financial burden.