Inka Dinka wrote:

- quote -

First the bad news. You can't deduct the 5000$ difference
you did not get.

Now, some good news. You don't have to pay tax on that
same 5000 you didn't get.

More good news. You can add the 3000$ difference to your
cost (basis) of the property before computing your gain.

Cheer$,
Harlan Lunsford, EA n LA

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I have a house that I am in the process of selling. Just
before closing a pipe froze and did some significant water
damage to the house. I had insurance which covered the
damage. I was wondering what (if anything) was deductable
on my taxes next year.

To make things clear, here are the numbers I am working with:

Offer to buy house was 220K and we signed purchase & sale
agreement with the buyer for that price. As a result of the
damage, the buyer lowered their offer to 215K (which we
unhappily accepted). The repairs cost 14K. Insurance would
only pay for 12K worth of repairs and after a 1K deductable
they paid us 11K.

Can I write off the 5K loss in value of the house on my
taxes? How about the 1K insurance deductable? How about
the 2K difference between the repair cost and the insurance
reimbursement?

Thanks.

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