Claiming Accident Deductions for Property Damage

If you have suffered property damage during the tax year as a result of a sudden, unexpected, or unusual event, you may be eligible to claim an accident deduction for the loss. This is also true if you are a victim of vandalism. When claiming unreimbursed repair costs, you should use Form 8829, which lists business expenses. The cost of reasonable repairs is usually the starting point for the deduction, as it also represents the decrease in the fair market value of the home due to the victim. For instance, if a window in your home is already broken and then gets worse due to a hurricane, you cannot claim the full cost of repairing that window.

When deducting repairs from a home office, you should identify the cost as either a direct or indirect expense. If you qualify for this deduction, you can deduct 100% of the cost of repairs done in your home office alone. Generally speaking, a repair puts the house back in the same condition as it was before the accident caused damage. If you haven't done the repairs yet or have not restored your home to its previous condition, you can measure the loss as the decline in fair market value due to the event. You should multiply the cost of repair by the portion of the house you are using for business or office.