! ance payments you receive for living

CAUTION expenses if you lose the use of your

main home or are denied access to it because of a casualty. You may have to include a portion of these payments in your income. See Insurance payments for living expenses in Pub. 547 for details.

Reimbursement received after deduct- ing loss. If you figure your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement.

Actual reimbursement less than expec- ted. If you later receive less reimbursement than you expected, include that difference as a

Publication 225 (2025) Chapter 11 Casualties, Thefts, and Condemnations 71

allowable casualty loss deduction was $2,000. In addition, your insurance company reimbursed you $8,000 for the damage and you spent $12,000 to restore the grain storage facility to its pre-casualty condition. Your adjusted basis in the grain storage facility after the casualty is $52,000 ($50,000 − $2,000 − $8,000 + $12,000).

Deduction Limits on Losses of Personal-Use Property

Casualty and theft losses of personal-use property may be deducted using Form 4684. For more information see the Instructions for Form 4684. This deduction will be entered on Schedule A (Form 1040) as an itemized deduction but you can increase your standard deduction by qualified disaster losses if you elect not to itemize your deductions. See Increased standard deduction reporting , later.

For tax years beginning after 2017, casualty and theft losses of personal-use property are deductible only to the extent they’re attributable to a federally declared disaster.

An exception to the rule above (limiting the personal casualty and theft loss deduction to losses attributable to a federally declared disaster) applies if you have personal casualty gains for the tax year. In this case, you may reduce your personal casualty gains by any casualty losses not attributable to a federally declared disaster. Any excess gain is used to reduce losses from a federally declared disaster.

There are two limits on the deduction for casualty or theft loss of personal-use property. You figure these limits on Form 4684.

$100 rule. You must reduce each casualty or theft loss on personal-use property by $100. This rule applies after you have subtracted any reimbursement.

10% rule. You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your AGI. Apply this rule after you reduce each loss by $100. AGI is reported on line 11b of Form 1040 or 1040-SR.

Example. In June, you discovered that your house had been burglarized. Your loss after insurance reimbursement was $2,000. Your AGI for the year you discovered the burglary is $57,000. Figure your theft loss deduction as follows:

Loss after insurance . . . . . . . . . . . . . . . $2,000
Subtract $100 . . . . . . . . . . . . . . . . . . . . 100
Loss after $100 rule . . . . . . . . . . . . . . . . $1,900
Subtract 10% (0.10) × $57,000 AGI . . . . . $5,700

5) Theft loss deduction . . . . . . . . . . -0-

You don’t have a theft loss deduction because your loss ($1,900) is less than 10% of your AGI ($5,700).

Please note this theft loss was not at-