How to Report a Casualty Loss to the IRS
If you're unfortunate enough to suffer damage to your property thanks to fire, flooding, or a similar disaster, you can at least take comfort in being able to claim the loss as a deduction on your tax return (and hopefully get a bit of a tax break for it). However, reporting such a loss isn't a simple matter.
Not all property damage counts as a casualty loss. The IRS defines a casualty as "the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual." If termites eat your house to pieces or the family dog shreds your drywall, it won't count as a casualty and you can't deduct it. A loss also typically won't be deductible if you caused it -- for example, if you dropped and broke an expensive vase.
Source: Fool.com
