Losses You Can Deduct

For tax years beginning after 2017, if you are an individual, losses of personal-use property from fire, storm, shipwreck, or other casualty, or theft are deductible only if the loss is attributable to a federally declared disaster (federal casualty loss). See Pub. 547 for more information.

If the event causing you to suffer a personal casualty loss occurred before January 1, 2018, but the casualty loss was not sustained until January 1, 2018, or later, the casualty loss is not deductible. See When To Deduct a Loss, later, for more information on when a casualty loss is sustained.

Caution: An exception to the rule limiting the deduction for personal casualty and theft losses to federal casualty losses applies where you have personal casualty gains to the extent the losses don’t exceed your gains.

If your property is covered by insurance, and your loss is otherwise deductible, you should file a timely insurance claim for reimbursement of your loss. If you don’t file a timely insurance claim, you can’t deduct the full unrecovered amount as a casualty or theft loss and only the part of the loss that isn’t covered by your insurance policy is deductible.

Related expenses. The related expenses you have due to a casualty or theft, such as expenses for the treatment of personal injuries or for the rental of a car, aren’t deductible as casualty or theft losses.

Costs for protection against future casualties aren’t deductible but should be capitalized as permanent improvements. An example would be the cost of a levee to stop flooding.