A casualty loss is defined as damage to or destruction of property due to a sudden, unexpected, or unusual event. Prior to the 2017 federal tax overhaul, taxpayers could deduct casualty losses of all kinds, including loss from theft, accidents, house fires, and other personal happenstance, as well as destruction due to large-scale disasters such as tornadoes and floods.You can deduct qualified casualty losses in the year you sustain the loss, but you must reduce the loss by any salvage value or any insurance you receive or expect to receive. Any losses you deduct must reach 10% of your adjusted gross income (AGI) and must add up to more than the standard deduction to make claiming them worthwhile.