Through the housing boom of 2001 to 2009, housing materials were in high demand and sourced from a number of locations, including out of the country. Drywall in particular was frequently bought in wholesale from international suppliers since domestic suppliers were pressed to meet orders. Cost issues also came into play, driving construction buyers to go out of country as well. However, as came to light years later, some of these materials were made substandard and caused serious corrosion and smell problems in the houses that included them.
The Internal Revenue Service (IRS) has acknowledged this issue and the costs associated with repair by providing the means to claim a tax relief for the work involved. The guidance released covers homeowners who have validated damages and property loss associated with drywall-caused corrosion and damage in a home from 2001 through 2009.
It is important for the purposes of filing a corrosive drywall claim to understand what corrosive drywall is defined as for tax purposes. The term “corrosive drywall” per the IRS press release and guidance means “drywall that is identified as problem drywall under the two step identification method published by the CPSC and the Department of Housing and Urban Development in their interim guidance dated January 28, 2010. “
The specific IRS guidance is spelled out in Revenue Procedure 2010-36 . The costs associated with mitigating he corrosion damage are also allowed to be claimed as a casualty loss. The claim must be associated with the tax year the homeowner’s payment was made for the repairs.
For those who already filed their taxes but subsequently have damages to claim after the fact, you can amend your already-filed taxes up to three years after filing. This is usually taken care of on an IRS Form 1040X by the taxfiler.
Those who have already recovered their damage losses through some kind of reimbursement cannot double-dip through the claim process with the IRS.
More information can be found on the IRS.gov website on the Internet and by reviewing Revenue Procedure 2010-36 .