Hurricane Ian loss

[maughact]

I don't do many of these since most of my clients are in Illinois.  

I have a client who has a vacation home that was destroyed during hurricane Ian..

He didn't have insurance for the inside of his condo.  He had to pay all out of pocket for the rebuild of the inside.  However, his association covered the dry wall out.  How do I account for what the HOA covered?  Does he have to find out from his HOA how much insurance reimbursement was specifically for his condo?   Any guidance would be appreciated.

[Terry53029]

See these links.

https://www.irs.gov/newsroom/irs-announces-tax-relief-for-victims-of-hurricane-ian-in-florida.

https://www.fema.gov/disaster/declarations?page=1

[Tax_Lady]

Having just gone through a fire disaster (peril) not federally declared.of 4+ years recovery and construction of a collasped building still ongoing til Sept 2025....but have gone through hurricanes, too...

First, need to read the Declarations of the Condominium Project and how owner unit shares interest in the common portion of the building structure.

Second, likely the HOA Board has declared Assessments to owner units based on the proration outlined in the Declarations:  a. If the owner carries a separate Assessment Insurance, even if does not have coverage inside the unit then the Assessment Expense is offset by what the insurance claim proceeds the owner unit received. Otherwise, the Assessment amount(s) would be added to basis. I would keep as a separate line item.

Once the HOA Board has numbers and start making assessments then owner has some real data and facts to report. It may be a few years of reporting the Casualty Loss (due to Presidential Federally Declared Named Storm) and allocating Owner's Out-of-Pocket Expenses for rebuilding interior of the unit, then catching up with the common element of building structure.

Your client may obtain further data provided by HOA Board via through Property Management Team. Check the Property Mangement's website, there may be a designated area for the client's Condominium Project where financials statements, and Disaster Documents are stored. Most of the other owners of the building would be needing for their insurance companies.

Owner Beware!!:  Educate yourself as to how the Board is purchasing Structure Insurance...Board either was silent or claim they thought was plenty of insurance...at this writing under insured by at least $3 to $4 million, ouch!! Plus, building codes change and whether a) Structure Policy has that endorsement, b) homeowner's policy has that endorsement! One part of the building might be damaged by the event but another portion is not, all may have to be replaced/updated and not covered by insurance so its assessment and owner out-of-pocket. Then haven't even address Flood Insurance!''

Hope this helps giving you direction...Happy Tax Season!