By Eric Bedner
Feb 8, 2018
The IRS has determined that homeowners who make repairs to their crumbling foundations within the next three years can amend their 2017 federal tax filings to deduct the cost.
Under the updated guidance from the IRS, which U.S. Reps. John B. Larson, D-1st District; Joseph D. Courtney, 2nd-District; and Richard Neal of Mass-achusetts announced Wednesday, homeowners will have through the end of 2020 to make qualified repairs to their homes and until April 2021 to claim those repairs on an amended 2017 federal tax return.
“This is welcome news for homeowners in our districts,” the congressmen said in a joint statement. “The additional three years afforded under this updated policy provides critical time for more homeowners impacted by crumbling foundations to make repairs and secure federal tax relief.”
As the state prepares to make available the first of five installments of $20 million, homeowners are given a longer period of time to take advantage of the funds and the tax deduction.
Although it has yet to be determined what percentage of individual homes will be fixed with state funds, an uninsured loss, whether total or partial, will be covered under the deduction, Courtney said.
This means that if a percentage of the repairs are done with state funds, the remaining cost incurred by the homeowner could be considered a loss and would be is deductible.
Courtney stressed, however, that individuals should consult with a qualified tax preparer for specifics, but “the good news is it creates a window of three years.”
To be eligible, homeowners must obtain a written evaluation from a licensed engineer and receive a reduced property assessment report showing their foundation contains the mineral pyrrhotite.
The update not only will provide some financial relief to homeowners and enable those capable of making repairs to properly budget for them, but it also provides more information to accountants, enabling them to make more accurate recommendations, Courtney said.
Courtney added that he and Larson would continue to push Congress to change the overall casualty loss deduction, which the federal tax bill eliminated.
In November, the IRS approved deductions related to crumbling foundations, but the new tax law, signed into law in December, repealed the casualty loss deduction.
As a result of the change, only taxpayers who suffer damage due to a declared disaster by the president will be able to deduct their casualty losses, beginning in tax year 2018. This provision expires in 2025.
“Since enactment of the new tax law, we have been in regular contract with officials from the Treasury and IRS to explore ways to extend as much relief as possible to homeowners in spite of changes made by the law,” the congressmen said. “We are grateful for their attention to our concerns and the support they have provided today to homeowners struggling with the damage caused by crumbling foundations.”