Dear Taxguru,

Nice going on the site! I came back after a month it's looking Great! Keep it up!

Now, for my question, I incurred substantial damage from flooding in 2006 and it cost me over $35,000 to fix my basement and replace my furniture. Of course, my insurance helped but there was a portion spent that was not reimbursed by my insurance company. The question is can I deduct expenses somewhere on the tax return? If so, could you please advise me where to deduct it!

Thanks for your help.....

Dear Curlopt,

The good news is that yes, you may be able to deduct some of the expenses paid to fix your home from the damage sustained provided you meet some of the IRS limitations.

"IRS Code Sec 165 (c)(3) limits any loss in the case of non-business property of individuals arising from fire, storm(flood), or other casualty. Each loss is subject to a $100 floor, and the total losses are deductible to the extent that the total loss amount for the year exceeds 10% of the Taxpayers Adjusted Gross Income."

Thus for your situation. the total damage sustained appears to be $35,000 for which the insurance company reimbursed you most of that amount. So, the amount that was unreimbursed is subject to a $100 floor, and the balance needs to exceed 10% of your AGI. The schedule to report the damage is Form 4684. The net amount is then carried to Line 19 of Schedule A.

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