Homeowners then may purchase additional protection with rates that vary with the risk. Federal income tax deductions. Losses suffered by homeowners that are not covered by insurance policies may be deducted from federal income tax returns. A loss is the amount that property decreases in value as a result of fire, flood, or other peril. A loss also may be determined by estimating the cost of replacement or repair to restore property to its condition before the accident or casualty.
Losses refer to property that is damaged, destroyed, or stolen.
This deduction applies only to losses that have not been reimbursed by insurance companies. If furniture or personal property is damaged or destroyed, the loss is computed for each individual item. This means that a good property inventory is essential in order to prove property value. Additional information on deducting property losses from income tax returns may be found in the IRS Publication 547 Tax Information on Disasters, Casualty Losses, and Thefts. There was no better evidence of the decrease in fair market value than your repair cost.