Atlanta Casualty Insurance

Casualty Loss Can generate tax deductions massive loss of damage that may occur as a result of a flood, hurricane, tornado, landslide or other natural disasters. The intuitive thought pattern is: "My apartment complex of $ $ 5,000,000 suffered major damage totaling $ 1,500,000 for repairs and rent loss. Fortunately, I was completely covered for physical damage and rent loss, other than the franchise small. There is clearly no loss of damage that I can claim a tax deduction, right? "
Tax deductions are the basis for the tax reduction. Tax deductions reduce taxable income but are not directly reduce federal taxes on income. For example, $ 100,000 of tax deductions reduces federal income taxes of $ 35,000 ($ 100,000 x 35%), assuming a tax rate of 35%. Most tax deductions require a cash expenditure (labor, equipment, supplies, utilities, etc.). A year expenditure of cash is not required for certain deductions of property taxes and can not be considered a loss of damage. Most homeowners and investors do not consider the losses suffered as a source of tax deductions. Few investors claim tax deductions accident loss of federal tax code allows them. Let's review the criteria for a tax deduction for losses and damages of the thought process regarding the acquisition of property that has suffered an accident. Real estate owners suffer a loss of damage when the market value, immediately after the accident and insurance products is less than the market value immediately before the accident. The complex issue is how the value of the property immediately after the accident. Consider an office park in suburban 1 floors in Mississippi who had 3 feet of flooding caused by Hurricane Katrina. Suppose further that: 1) 8 foot sheet rock must be replaced throughout the facility to rebuild, 2) although the property was 90% occupied before the flood, occupancy is expected to be 5% during the reconstruction is product, 3) stabilized occupancy after renovation is not clear, because some companies can not return, 4) construction will take 12-18 months due to work pressures, and 5) the owner has casualty insurance reconstruction, but had no rental loss / business interruption insurance. It is clear that the market value after the loss is less than the market value before the accident costs of construction less. Other factors to consider include: loss of rent, the market risk that is not enough tenants will be available after construction is completed, the cost of construction management, an illiquid market with few buyers just after accident, the construction risk, the risk of interest rate (rate may increase during the construction period negatively affect the value), the risk that operating expenses could increase during the construction period (perhaps insurance) and compensation for the effort of entrepreneurship to encourage a buyer to coordinate labor capital, management and remuneration of capital during Reconstruction and the process of liberation. A careful analysis by an evaluator could show improvements have no value after the flood. In assessment missions conducted by the writer, accidental loss of 10-30% of market value before the accident took place (in a straight-forward, defensible analysis) is typical. This can cause a loss of significant harm (and tax deduction). For example, a property whose market value of $ 5,000,000 for losses suffered a loss of 30%. While the victim is a serious detriment to the owners, the tax deduction of $ 1,500,000 ($ 5,000,000 X 30%) will reduce the financial loss. Congress provided a tax deduction for damage loss to encourage investment in real estate. If you have the misfortune to suffer a casualty loss, take the hand offered by Congress and take the tax deduction. Click here for an F.