The IRS has issued guidance for relief to homeowners who have experienced property losses due to imported drywall installed in homes between 2001 and 2009.
Revenue Procedure 2010-36 enables taxpayers to treat corrosive drywall damage as a casualty loss and provides a “safe-harbor” for determining the amount of the loss.
Homeowners with certain imported drywall have reported blackening or corrosion of copper electrical wiring and copper components of household appliances, and the presence of sulfur gas odors.
The following relief is provided:
The amount paid by the taxpayer to repair damage to their personal residence or appliances resulting from corrosive drywall may treat the amount paid as a casualty loss in the year of payment. Taxpayers who have already filed their income tax for the year of payment generally have three years to file an amended return.
The amount of loss to be claimed depends on whether the taxpayer has a pending claim for reimbursement (or intends to pursue reimbursement) of the loss through a property insurance claim, litigation or otherwise.
If the taxpayer has no pending claims for reimbursement, the full amount of all unreimbursed amounts paid during the taxable year may be claimed as a loss. If there is a pending claim, a taxpayer may claim a loss for 75% of the unreimbursed amount paid during the taxable year to repair damage.
A taxpayer who has been fully reimbursed before filing a return may not claim a loss.
For additional information, review the information available on the web sites following this article.
Tax Wisdom: For me it’s a little difficult to give tax relief to people that don’t pay income taxes.