I recently took out a homeowner's insurance policy and apparently the policy required that I provide an inventory of damaged personal property within 60 days of the insurance company's request. There was a fire in my basement this year and I wasn't able to get all of the required materials to the insurance company within the 60 day period. As such, the company has denied my claim. Can I still deduct a casualty loss on my tax return?

ANSWER

The BIDaWIZ Team's Answer:

Unfortunately, you cannot claim the casualty loss for the insured part of the home in this case. Internal Revenue Section 165(h)(5)(E) states that the loss of an individual described in subsection (c)(3) to the extent covered by insurance shall be taken into account under this section only if the individual files a timely insurance claim with respect to such loss. As such, you will not be eligible to claim the casualty loss. One other point to note, any amount of the property that wasn't covered by insurance as well as the deductible may be claimed as a casualty loss.