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Tax Deduction For Roof Replacement

Level 3

My client has asked me to determine if the cost of his roof replacement can be deducted on his tax return.  The circumstances are a bit unusual and may be a stretch to deduct the cost but I think it it worth considering and would like any guidance possible.

Client resides in Florida and was in the zone for qualified hurricane deductions from IAN which occurred in September, 2022.   He filed a claim with his insurance company but was denied reimbursement for a roof replacement as the insurance company determined the damage did not rise to the level for a full roof replacement.   He did incur some damage and had the roof repaired for approximately $2K.   

Now, in 2023 his insurance company has stated they will not renew his homeowners insurance policy unless he pays, out of pocket, for a new roof which will cost him about $65K.

I could find where a casualty loss may be valid where "repairs must be necessary to maintain the property’s value or restore it to its original condition".

Also whether the casualty loss may be a qualified hurricane related loss or general casualty loss.

Any thoughts will be greatly appreciated.




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2 Comments 2
Level 15

Unfortunately, an insurance company that denies coverage is not a casualty.  Therefore no deduction.

Level 15

I just saw a story where it has been determined that leprosy is endemic to parts of Florida.  This was a surprise to me because I thought only imbecility was a problem there.  Both problems will probably go away after the peninsula is permanently flooded.  For now, however, the issue is the amount of your client's 2022 casualty loss.  

It is not the insurance company who determines that.  The loss is the decrease in value from before to after the storm.  A property that cannot be insured is worth less than one that can be.  The hurricane taught residents that better roofs are needed to maintain the value of their home.  I agree, it's a stretch, but I would have to think about it from the perspective of "let's not try to find a reason to get to NO."  Which you usually don't find on this forum.  

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