LI property owners could deduct some Sandy losses
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Long Islanders whose property suffered the wrath of superstorm Sandy may find some help at tax time this year. The Internal Revenue Service allows certain property damage from storms, fire and theft to be deducted from taxes, but complicated rules may keep accountants busy.
People whose property losses weren't completely covered by insurance or government aid can deduct part of the loss.
The deduction "can actually be a nice savings for somebody," said Steven Schlachter, an accountant at Margolin, Winer & Evens Llp in Garden City. "It's not going to rebuild their house, but it can definitely help."
Sandy tossed Peter Kopher's Seaford house barge onto land, leaving it with an open seam, electrical problems and a damaged hull. Before the storm hit, Kopher and his wife were trying to sell the 1,100-square-foot home for $125,000. They received about $50,000 in aid from the Federal Emergency Management Agency and the state, he said, and they've put it on the market for $49,900.
"The money I had sunk into the house barge, that was our nest egg to buy a house," he said. "If I'm losing half of it, that's going to make a serious effect on what we can afford to buy."
Kopher, 56, a television stagehand who has moved to Sugar Loaf in Orange County, said he's spoken to his accountant about claiming a casualty loss and was told the amount he can claim will be based in part on how much he can sell the home for.
The IRS puts limits on how much taxpayers can write off. A homeowner can't deduct more than he or she invested in the house, even if its value has appreciated. The loss is based on the change in fair-market value immediately before and after the storm, determined by either an appraisal or a tally of actual repair costs.
Once the loss is determined, the deduction is calculated by subtracting insurance payments and government aid as well as a deductible based on 10 percent of a taxpayer's adjusted gross income plus $100.
Robert Spielman, a partner at the accounting firm Marcum Llp in Melville, said loss of records is one problem.
"If you don't have exact records and you can with reasonable accuracy figure out what you've invested in a house, that's the best you can do," he said.
Kevin Matheson, president of West Islip-based Appraisal Reports Inc., said doing an appraisal after Sandy is difficult if there is scant documentation.
"It's very hard to determine what was that true condition of the house beforehand," he said.
FIGURING OUT YOUR DEDUCTION
1. Determine the "basis" for the property -- amount of money spent on the home, including purchase price and improvements. This is the cap.
2. Determine the change in fair-market price caused by storm damage, either with an appraisal or by using the cost of repairing or cleaning up the property. This is the loss.
3. Subtract insurance reimbursement and government aid from the loss.
4. Then subtract $100.
5. Next subtract 10 percent of the filer's adjusted gross income. This is the adjusted loss.
6. If the adjusted loss is less than the cap, then that is the deduction. If the cap is lower, then that is the deduction.
Source: IRS, tax accountants; consult a tax professional to