Casualty Losses and Income Taxes

A casualty loss is classified as “The damage, destruction or loss of your property”. These losses can be tricky to report and deduct on your taxes. However, we have compiled a few tips to help you.

In Minnesota, both federal and state tax reporting follow the same set of procedures. If you have a casualty or loss relating to real property (your home, household items or vehicles), you are allowed to deduct it on both your federal and state tax return. A casualty event includes unexpected or uncommon events and disasters but does not include normal wear, tear or breakdown from usage.

If your property is not completely demolished you need to find the lesser of the adjusted basis of your property or the decrease in fair market value. This can be difficult to do, so it is recommended that consult an appraiser. Once you have calculated this amount, you must … Read More