The IRS is offering some relief for taxpayers with defective imported drywall in their homes. Drywall produced in China has been linked to a rotten egg smell and corroded metal components in homes across the U.S. The Consumer Product Safety Commission (CPSC) has received nearly 4,000 reports from residents in 39 states about problem drywall.
The IRS is allowing homeowners to treat damages from the drywall as a deductible casualty loss. A casualty loss deduction is generally the total of your unreimbursed loss reduced by $100 ($500 for 2009) and further reduced by 10% of your adjusted gross income. You have time itemize to claim a casualty loss.
Here's how it works:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
--Damages had to occur from imported drywall installed in homes between 2001 and 2009.
--To be considered "corrosive," drywall must meet the CPSC's two-step identification method.
--Taxpayers can claim unreimbursed amounts paid to repair damage to their homes or appliances as a casualty loss.
--The loss must be claimed for the year payments were made. Taxpayers who already filed a return for that year have three years to file an amended return.
--If a taxpayer has a pending insurance claim (or plans to seek reimbursement), the taxpayer may claim a loss for 75% of the unreimbursed amount paid.
--Taxpayers who have been fully reimbursed for repairs may not claim a loss.
Here's an example of how the deduction works: Say you paid $10,000 in 2009 for the drywall repairs, none of which was reimbursed by insurance. You reduce that amount by $500 to get $9,500. Then reduce that amount by 10% of your adjusted gross income. If your AGI is $75,000, 10% is $7,500. You’d subtract $7,500 from the $9,500 to get $2,000. You can deduct $2,000.
For more information about claiming drywall damage as a casualty loss, see Revenue Procedure 2010-36.
-
How to Invest as the AI Industry Grows UpHere’s where to find the winners as artificial intelligence transitions from an emerging technology to an adolescent one.
-
I’m 62 and worried about Social Security’s future. Should I take it early?A Social Security shortfall may be coming soon. We ask financial experts for guidance.
-
Ask the Editor, July 17: Tax Questions on the New Tax LawAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the new tax law.
-
Ask the Editor, July 4: Tax Questions on Inherited IRAsAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the rules on inheriting IRAs.
-
IRS Watchdog: Three Problems the IRS Must Address in 2025IRS The tax season is over, but new changes to the IRS can pose risks to your taxpayer experience.
-
Elon Musk and Most Taxpayers Don't Like What's in Trump's 'Big Beautiful Bill'Tax Policy President Trump is betting big on his newest tax cuts, signed into law on July 4. But not everyone is on board.
-
Ask the Editor, June 27: Tax Questions on Disaster Losses, IRAsAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on paper checks, hurricane losses, IRAs and timeshares.
-
2025 SALT Cap Could Hurt Top 'Hidden Home Cost'Tax Deductions The GOP tax bill could make hidden homeowner costs worse for you. Here’s how.
-
No Social Security Tax Changes in Trump’s 'Big Bill'? What Retirees Need to KnowTax Policy Eliminating taxes on Social Security benefits is missing from President Trump’s tax overhaul. Here’s why and what an alternative offering could mean for retirement taxes.
-
Ask the Editor, June 20: Questions on Tax Deductions and IRAsAsk the Editor In our latest Ask the Editor round-up, Joy Taylor, The Kiplinger Tax Letter Editor, answers four questions on deductions, tax proposals and IRAs.
