Tax relief available for home owners with corrosive drywall

by Broderick Perkins
DeadlineNews.Com

(11/10/2010) Taxpayers can treat damages related to corrosive drywall as a casualty loss and seek tax relief from the Internal Revenue Service. The new IRS' Revenue Procedure 2010-36 outlines how affected taxpayers can claim the loss.

The Consumer Product Safety Commission (CPSC) has received about 3,650 reports about drywall imported from China. Homeowners with the drywall have reported a "rotten egg" sulfur-like smell within their homes as well as health concerns such as irritated and itchy eyes and skin, difficulty in breathing, persistent cough, bloody noses, runny noses, recurrent headaches, sinus infection, and asthma attacks.

In recent years, consumers have also reported blackened and corroded metal components in their homes and the frequent replacement of components in air conditioning units.

In November 2009, the CPSC reported that an indoor air study of a sample of 51 homes found a strong association between the problem drywall, levels of hydrogen sulfide in those homes and corrosion of metals in those homes.

The majority of the reports to the CPSC have come from consumers residing in the State of Florida, followed by Alabama, Louisiana, Mississippi and Virginia and, to a lesser extent, from 35 additional states, Washington, D.C. and Puerto Rico.

The affected homes were built in 2006 to 2007 during an unprecedented increase in new construction in part due to the hurricanes of 2004 and 2005, but the tax ruling covers homes built with problem drywall from 2001 to 2009, according the IRS.

Details for taxpayers include:

• If you pay to repair damage to your personal residence or household appliances resulting from corrosive drywall, you can claim the amount paid as a casualty loss in the year of payment. You should seek help from a professional tax preparer to do so.

• If you've already filed your tax return for the year of payment you generally have three years to file an amended return to claim the deduction.

• The IRS says the amount of a loss claimed depends on whether you have a pending claim for reimbursement (or intend to pursue reimbursement) of the loss through property insurance, litigation or otherwise.

• If you do not have a pending claim for reimbursement, you can claim as a loss all not reimbursed amounts paid during the taxable year to repair damage to your residence and household appliances resulting from corrosive drywall.

• If you do have a pending claim (or intend to pursue reimbursement), you can claim a loss for 75 percent of the not reimbursed amount paid during the taxable year to repair damage, to your home and household appliances, that resulted from corrosive drywall. • If you have been fully reimbursed before filing a return for the year the loss was sustained, you may not claim a loss.

• If you have a pending claim for reimbursement (or intend to pursue reimbursement), you may have income or an additional deduction in subsequent taxable years, depending on the actual amount of reimbursement received.

Again, you will likely need the services of a tax professional to be certain you receive full benefits of this deduction or don't seek a deduction for which you are not eligible.

Follow the link to continue reading the related articles.

Proposed mortgage tax break battle looms

Homebuyer tax credit extension for contracted homebuyers only

Five Ways to Make Your Tax Refund Work for You

Housing Related Tax Incentives: Are They Really Such a Good Idea?

Homeownership & Taxes: How Good Records Can Save You a Bundle

Fannie Mae & Jumbo Mortgage Rates     Just One Click! = Current Rate Chart