For those trying to recoup losses after superstorm Sandy, there is a federal tax law to keep in mind.
The storm was a federally declared disaster. “The federal tax code allows a personal itemized deduction for casualty [property damages] sustained during the taxable year that were not compensated by insurance or other sources,” says Thomas Butler, tax principal of Berdon Llp, with offices in Jericho and Manhattan.
However, there are limitations. For instance, the net amount of damages is allowed if losses exceed 10 percent of adjusted gross income for the year.
Typically, damages must be claimed in the tax year it occurred. There are exceptions though -- and Sandy is one of them. “Since Sandy was a federally declared disaster, the casualty loss may be claimed in 2011 rather than 2012, which could result in a larger and quicker refund than waiting to claim the loss on the 2012 tax return,” Butler explains.
To find out if you qualify, consult with a certified public accountant.