by Broderick Perkins
(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.
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
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
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
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
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