How Do I Deduct Storm Damage on My Taxes?
Finally, the past year is behind you. Your business in South Cleveland, TN, suffered serious storm damage. After partnering with your commercial insurance agent and a storm restoration specialist, your business is back and better than ever. But, now it is tax time and you have questions. Is the damage tax deductible? If so, how do you deduct the damage on your commercial income taxes?
How To Know What Is Deductible
Taxes are confusing for many people, and business owners are no exception. What aspects of the storm damage to your property are tax deductible?
- Before you consider the costs of the damage, remember that commercial property insurance is also deductible on your business taxes. With that being said, you cannot deduct the funds that were covered, or reimbursed, by your insurance company.
- If you have damage to your business and personal property from the same natural disaster or event, you may only be able to deduct the business loss.
- You can deduct the loss from damage whether you itemize or not.
- For a presidential declared disaster, there may be flexibility in terms of the tax year you deduct the loss.
How To Claim the Tax Deduction
There is a process for claiming a tax deduction for damage to your commercial property. What does this include?
- Complete the Casualties and Thefts IRS Form 4684.
- Only deduct the property loss, not loss of income.
- Prepare to provide documentation of ownership, including initial cost of the damaged property.
- Purchase replacement property within the tax year if you end up with a gain after factoring in insurance reimbursement, or you may end up paying taxes on the gain.
Owning a business in South Cleveland, TN means paying taxes. When your commercial property experiences storm damage, this complicates your tax situation. Understand what is deductible, and what necessary to complete the process to provide the most benefit to you and your company.