Leak Damage Income Tax Deduction

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?

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Deductions Questions.

Please subscribe to my monthly newsletter, Bookkeeping Basics E-zine. It tells you every month about the new information that I have added, including some great tips and advice from myself and other Bookkeeping Basics readers.

Enter Your E-mail Address
Enter Your First Name (optional)

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you Bookkeeping Basics E-Zine.

Like Bookkeeping-Basics.net?