Cut Your Tax Bill After A Natural Disaster

12/6/2017 (Permalink)

No one wants a natural disaster to hit but it could cut your tax bill

Most people don’t realize they can cut their tax bills after a natural disaster damages their home according to a December 2017 article by Lew Sichelman. In the article, Patrick O’Connor, president of one of the country’s largest tax consulting firms, says to call your local tax appraiser’s office after major damage. If you do call, the value of your property could go down significantly and that would reduce your tax bill.

Examples include homes damaged by natural disasters like the recent Northern California fires, and the hurricanes that hit the Gulf Coast, Florida, and Puerto Rico. Here’s how it might work. Imagine your Bloomfield, Connecticut house was worth $500,000 before a natural disaster. But the natural disaster that hits Connecticut decreases your home’s value to $230,000. If your local appraiser or tax assessment office knows that, he or she can reduce the valuation on your Bloomfield home or business appropriately.

If you don’t let the tax authority know your house could be assessed as if it were in normal condition despite its diminished market value. Most local tax officials don’t visit every house in their district every year so they may not be aware of the need to charge you less.

Avoid preventable disasters. Call SERVPRO Of Bloomfield/Enfield (860) 216-2785

Across Connecticut, Massachusetts, and the country each town, city, and county has its own system for valuing property. When disaster strikes some authorities proactively assess the local damage. Others do not have the resources to do so. Regardless, SERVPRO of Bloomfield/Enfield recommends you call the Bloomfield, Enfield or your other local tax appraiser office just to make sure they know your property has lost some value.

In some states, like Texas, you’re required to tell would-be buyers if your home suffered flood damage.

Maximizing Your Tax Relief

To receive the most tax relief, you usually need to document the condition of your house when it suffered the damage and after SERVPRO cleanup restoration at the end of the year. Also report any repairs done on your property and what still needs repair.

Federal Income Tax Refund Possible
Also, whether you were insured or not when the snow storm, hurricane, flood, or other natural disaster struck, you may be eligible for a federal income tax refund because of the damage. The IRS has a provision called Section 165 that allows for a deduction as a result of casualty losses. Of course, tax law is subject to change so always check with a professional tax advisor.

Avoid preventable disasters. Call SERVPRO Of Bloomfield/Enfield (860) 216-2785

Cash From The SBA
Another way to get cash is a Small Business Administration (SBA) loan. The SBA usually makes loans to businesses, but after a named disaster, the SBA makes low-interest loans to individuals. In December 2017 interest on these SBA loans was 1.75 percent amortized over 30 years. The loans are capped at $200,000 for rebuilding and $40,000 for personal property like autos, clothing, and tools.

If a natural disaster does major damage to your home or business, call your insurance company first. But remember to call your local appraiser’s office later.

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