Thursday, November 10, 2005
More Bang for Your Buck: Tax Break
This year's hurricane season giving a lot of south Floridians unexpected expenses but there is a way for you to recover some of your costs. 7's Tom Haynes live in the plex with the details
WSVN--The insurance costs for hurricane Wilma are expected to top more than 10 billion dollars. But if you're still scrounging for money to spend on repairs, Uncle Sam may be able to offer some assistance. In tonight's More Bang for your buck, we found there will be plenty of tax breaks available if you keep good records.
From fallen trees to down traffic lights... Two and a half weeks after Wilma, south Florida's scars are still very visible.
Liz Santiago/Home Damaged:"This was once a bathroom. Not anymore. Everything just came down."
For Liz Santiago, the recent storm packed an unusually powerful punch.
Liz:"I really thought we were dead. We were going to be dead because all you heard was clacking. You heard rumbling."
Since her home is in shambles, Liz hopes insurance will cover most of the cost. But she knows what isn't covered could be partially financed in the form of a tax break.
Ken Strauss of Berkowitz Dick Pollack & Bryant:"Because it is a presidentially declared disaster area we get special benefits."
Accountant Ken Strauss says the special benefits start with a deduction called a casualty loss. Basically it allows you to write off the lost value to your home.
Ken:"What I usually suggest and what the law allows for you is to go out and actually repair your property and when you repair your protery that's the best way to estimate the loss of value."
As for any repairs made, the IRS will let you claim any out of pocket expenses like your insurance deductible.
But the rules change if your home is demolished or condemned. Then you may need to hire help so you can deduct what your home is worth minus what the land is worth.
Ken:"If you're entitled to an insurance reimbursement for any part of your loss. You must reduce the amount of your loss by the amount of insurance premiums you receive."
Now, once the repairs are finished, get an appraisal. If your home is worth less after the storm, you can claim the difference as a decline in value. Of course, you can also write-off-damaged furniture, appliances, even boats.
Ken:"One of the keys to substanting your loss is not only calculating your loss but proving your loss."
The best way to prove your losses - keep good records. Take pictures and organize all your receipts.
As for Liz, it's going to be a long recovery process. But she knows there is at least some relief in sight.
Liz:"It will help me out in a lot of ways I'm putting money out and I'll see what they are willing to give us."
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