Leak Damage Income Tax Deduction

Leak Damage Income Tax Deduction

My Arizona home was built in 1951. I had a terrible smell coming from the garbage disposal for quite a long time.

Since the home is so old I figured it had to be something leaking. However, I could see any visible leaks, it had to be coming from inside the walls.

I had to remove my old counter top and cabinets, they were not salvageable. I also had to tear up a lot of old tile to get the cabinets out so that I could get to the walls.

I tore off the old crumbly plaster and saw wetness coming from the cinder block. I removed some of the block and got the galvanized iron drain pipes exposed.

There were 2 1/2 inch holes in the bottom of the pipes that had been leaking kitchen waste in them for who knows how long.

There is a common wall to a bathroom to the east of where the sink was. I saw more wetness near that wall so I had to remove the rest of my old cabinets.

After getting the old plaster and drywall off I discovered the tub had been leaking also. There was a lot of black mold on the framing.

I am not a contractor but have built 4 homes from the ground up with my father and we did an addition to this home also.

I removed what framing I could and bleached everything I could not remove. My insurance company does not cover this type of damage and it had been doing damage sight unseen.

We did not know about the mold. I had to replace my kitchen cabinets and the entire tile floor since it was so old I could not match it anymore.

To pay for all this I had to take out $25000 from my 401k. As you may have guessed I have a huge $13000 tax bill.

Since it is mold damage can I deduct any of the work I had to do to make the home livable again. I had a plumber repair all the broken pipes and a cabinet company do the new cabinets but I did all the framing, cleanup and drywall myself to save money.

The bills came to over $24000. I have receipts is this a deductible loss?

 SUBSCRIBE to YOUTUBE