Tax Break for Chinese Drywall

Ahhhhhh. The sweet smell of sulfur in the air. Nothing could be more corrosive! Thousands of taxpayers are still dealing with the horrible mess of corrosive drywall~otherwise known as, “Chinese Drywall.” The issues began when the appearance of certain imported drywall hit the US marketplace between 2001-2008. Homeowners have reported blackening or corrosion of copper electrical wiring and copper components of household appliances, as well as the presence of sulfur gas odors. In November 2009, the Consumer Product Safety Commission (CPSC) reported that an indoor air study of a sample of 51 homes found a strong association between the problem drywall and levels of hydrogen sulfide in those homes and corrosion of metals in those homes. Many taxpayers have had to move out of their homes because of health reasons due to the heavy sulfuric odor.

There is some good news though~ The IRS is giving a helping hand to those taxpayers who have suffered a loss due to corrosive drywall. The service is allowing those who have paid for repairs to their homes, due to corrosive drywall, to treat these costs as a casualty loss on their tax return. This will at least offer some relief to homeowners who have had this sulfuric headache!

Revenue Procedure 2010-36 provides the following relief:

• Individuals who pay to repair damage to their personal residences or household appliances resulting from corrosive drywall may treat the amount paid as a casualty loss in the year of payment.
• Taxpayers who have already filed their income tax return for the year of payment generally have three years to file an amended return and claim the deduction.The amount of a loss that may be claimed depends on whether the taxpayer has a pending claim for reimbursement (or intends to pursue reimbursement) of the loss through property insurance, litigation or otherwise.
• In cases where a taxpayer does not have a pending claim for reimbursement, the taxpayer may claim as a loss all unreimbursed amounts paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances resulting from corrosive drywall.
• If a taxpayer does have a pending claim (or intends to pursue reimbursement), a taxpayer may claim a loss for 75 percent of the unreimbursed amount paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances that resulted from corrosive drywall.

If a taxpayer has received full reimbursement from their insurance company, then they are not eligible for this loss on their tax return.

If you or anyone you know has had this unfortunate experience with Chinese Drywall, please feel free to contact our office at http://www.efileflorida.com for guidance. You can also reach us by email at: info@efileflorida.com.

 

E-File Florida helps individuals and small business owners to lower their tax bills and maximize their tax refunds. We actually enjoy getting to know our clients and have built a solid reputation of delivering excellent personal service while maintaining the highest level of integrity within the tax preparation industry. We welcome the opportunity to make you a Raving Fan!

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