IRS Offers Tax Break for Homeowners With Defective Drywall

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IRS Offers Tax Break for Homeowners With Defective Drywall

by Joaquin Sapien, ProPublica, and Aaron Kessler, Sarasota Herald-Tribune 41 minutes ago


The federal government has made a modest step toward offering some financial relief to homeowners dealing with contaminated drywall. The Internal Revenue Service announced <1> Thursday that it will allow homeowners to write off expenditures they have or will incur trying to fix their homes.

The Consumer Product Safety Commission has recommended <2> (PDF) that homeowners remove all the drywall, along with the electrical, gas and fire safety systems -- essentially gutting the homes. The drywall, most of it imported from China, emits high amounts of hydrogen sulfide, which can corrode wiring and other electronic appliances, causing refrigerators and air conditioners to fail. Homeowners also have complained that the drywall triggers respiratory problems, nosebleeds and severe headaches.

According to the new IRS policy, homeowners can treat the amount they paid for these repairs as a "casualty loss in the year of payment." Casualty losses are typically reserved for repairs homeowners have made after a natural disaster or sudden event.

The policy includes some important caveats. For example, if a homeowner has filed a claim with an insurance company, the homeowner can write off only 75 percent of the amount the insurance didn't cover. Homeowners also must itemize their federal tax returns. Deductions will be granted only for amounts that exceed 10 percent of the taxpayer's adjusted gross income for the year the claim is filed and for amounts that exceed $500.

Taxpayers who have already filed tax returns for the year in which they paid to fix their houses have three years to amend their returns and claim the deduction.

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http://www.propublica.org/article/irs-offers-tax-break-for-homeowners-with-defective-drywall