Tax Losses from Casualties such as Fire & Floods
To reduce the corporate tax rate, a plethora of tax deductions for individual taxpayers was eliminated including the deduction for casualty (such as fire and floods) losses.
For 2018-2025 years, Casualty losses generally are not deductible. Only a qualified disaster-related personal casualty loss that occurs in a presidentially declared disaster area and is a result of the disaster is tax deductible.
Therefore, taxpayers suffering casualty losses from events (such as fires and floods) not declared a federal disaster will find no tax relief. This devastating financial outcome adds insult to the injury.
For the current victims of the California wildfires, casualty loss deductions are available as they are within presidentially declared disaster areas.
Personal Finance Tip: Make sure your properties have “replacement value” insurance coverage as this will protect the full value of your building.