The IRS has added damage caused from Chinese drywall to this year’s list of deductible casualty losses. The list also includes damage from tornadoes, hurricanes, blizzards, and other disasters. Typically, a disaster is required to be “sudden,” but Congress recognized the argument that problems caused from Chinese drywall were certainly unexpected and unusual.
Many people complained of getting nosebleeds, headaches, itchy eyes, and itchy skin while in their houses, all symptoms which were eventually traced back to Chinese-made drywall. The drywall contained sulfur and emitted foul-smelling fumes. The chemical also corroded electrical equipment and pipes, which caused a lot of damage. The sulfur fumes even caused damage to appliances and air conditioning units.
This problem effected people in at least 42 states, the District of Columbia, American Samoa, and Puerto Rico. The U.S. Consumer Product Safety Commission and state and local authorities received many complaints from these varying geographical areas reporting negative health symptoms and damage to their property which they believed was related to the drywall.
Because of these severe issues, many consumers decided to make costly repairs to their homes. Since this is recognized as a disaster for tax purposes, those repairs to damaged infrastructure and appliances are likely tax deductible. After some advocacy efforts in court and Congress, the widespread claims of problems resulting from Chinese drywall fumes received enough attention to be tested. The Environmental Protection Agency and other federal agencies collected and tested samples of the culprit drywall and determined it to be a legitimate cause of the reported health and property problems.
For this particular issue, the IRS has created safe harbor time tables and guidelines for claiming the deductions.
In addition to this tax relief measure, Congress has instituted policies covering many other disasters, which are not required to be “natural disasters”. Relief for expenses due Chinese drywall damages can ease the burden of your overall tax bill in addition to natural disasters and some other less dramatic incidents that do not happen on a large scale. These incidents include home burglaries, car accidents, or even vandalism to property.
Many of these deductions are often overlooked, meaning many taxpayers miss out on money that they could receive in an effort to ease the financial burden of having to fix a problem caused be an event out of their control. It is important to remember that deductions are available for more than just natural disasters that get a lot of attention in the news media, so check to see if any of your expenses qualify as a deduction from your tax bill.