Tax Guide

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Casualty and Theft Loss Tax Deductions

This tax deduction lets you write off a loss from a casualty or theft related to your home, your vehicle or other property. To deduct a loss, it cannot be reimbursed by insurance.

A casualty loss is damage or loss of your property due to sudden, unexpected or unusual events such as natural disasters, including earthquakes and volcanic eruptions. Normal wear and tear on property or deterioration from age don't count.

To qualify as a theft loss, the property must be taken in an illegal action and with criminal intent.

Personal property that is not destroyed by the casualty event is valued as:

  • The adjusted basis of the property, or
  • The decrease in fair market value of your property after the theft or event (whichever is less).

In a loss from theft, the amount from your loss is generally the adjusted basis of your property, since the fair market value of your property immediately after the theft is considered to be zero.

If there’s any salvage value for the property (the scrap value of the remains of your stolen car, for example), that will be deducted from the amount you can claim, as will be any reimbursement from insurance.

For the rules concerning casualty or theft losses, see IRS Pub 547 – Casualties Disasters and Thefts.

To report casualty or theft losses on your return, use our Form 4684 screen.

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