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Crumbling Foundations

 

Many homeowners in parts of our state have discovered that their home foundations are crumbling due to a mineral called pyrrhotite in the concrete used to pour their homes’ foundations. 

Over the past few years, Representative Larson has worked side-by-side with Representative Joe Courtney (CT-02), Senator Richard Blumenthal (D-CT), Senator Chris Murphy (D-CT) and local, state, and federal stakeholders to find solutions for Connecticut homeowners affected by this terrible issue. 

Congressional efforts have been focused on two areas: federal studies and tax relief.  
Tax Relief:

 

Beginning in 2016, Reps. Larson and Courtney began consulting with the Internal Revenue Service (IRS) and Treasury Department staff, including then-IRS Commissioner John Koskinenthen-National Taxpayer Advocate Nina Olson, Department of Treasury Assistant Secretary for Tax Policy David Kautter and Treasury Secretary Steve Mnuchin. As a result of these meetings, on November 22, 2017, the IRS issued Rev. Proc. 2017-60 to enact a “safe harbor” for the treatment of crumbling foundation-related repair costs as a “casualty loss” deduction from a taxpayer's taxable income under Section 165 of the Internal Revenue Code.  

Unfortunately, the Republican tax law passed in 2017 temporarily limits the casualty loss deduction until 2025, excluding homeowners with crumbling foundations. Under the law, only taxpayers who suffer damage related to a presidentially-declared Stafford Act disaster may deduct their property-casualty losses. In order to mitigate this change, Representatives Larson, Courtney, and Neal (MA-01) were able to obtain guidance from the IRS to extend the period of time that homeowners would have to claim crumbling foundation related repairs on their federal taxes. Under the new guidance, homeowners will now have through the end of 2020 to make qualified repairs to their home and until April 2021 to claim those repairs on an amended 2017 federal tax return. 

Rep. Larson is working to pass a permanent fix for the casualty-loss provision. He joined Congressman Courtney to introduce H.R. 3251, which would repeal the temporary ban on using the casualty-loss deduction. On June 20, 2019, Rep. Larson secured Ways and Means Committee Chairman Neal’s on the record commitment that the Committee would address the casualty loss issue.  

Federal Action: 

Working with Senators Murphy and Blumenthal (D-CT) and Representative Courtney, Rep. Larson was able to secure three federal studies as part of the federal appropriations process: 

  • A Government Accountability Office (GAO) study to examine the financial impact of pyrrhotite in concrete home foundations. When completed, this study will provide an estimate of the financial toll due to crumbling foundations. The study will also examine responsive actions already taken to mitigate this impact and present any additional actions the federal government can take in order to further do so. This study was directed as part of a FY19 government appropriations law (P.L. 116-6) and is expected to be completed in the first half of 2020. 

  • A U.S. Geological Survey to develop a map showing pyrrhotite occurrences across the United States. The results of this research will lead to a greater understanding of other areas that may experience crumbling foundations in the future. This study was directed as part of a FY19 government appropriations law (P.L. 116-6) and is expected to be completed in early 2020. 

  • A National Institute of Standards and Technology (NIST) study to research the effects of the mineral pyrrhotite on concrete aggregate. NIST is the leading federal expert in cement and concrete standards and will develop a cost-effective and standard testing method for at-risk homes and other structures for the presence of the mineral pyrrhotite. The study will also result in the creation of a risk-rating scale so that homeowners, businesses, and local government have a better understanding of what quantity of pyrrhotite poses a danger to their foundations’ structural integrity. These results will provide much needed information to towns and homeowners who currently have no way of accurately accessing their properties risk of collapse and potential impact on property value. This study was funded in an FY20 government appropriations law (P.L. 116-93). 

More on Crumbling Foundations

October 22, 2018 Press Release

(Hartford, CT) - Today, Congressman John B. Larson (CT-01) and Congressman Joe Courtney (CT-02) announced that the IRS Stakeholder Liaison will be conducting a free webinar on Wednesday, October 24, at 10:00 AM for tax preparers and homeowners who would like to learn more about deducting the cost of crumbling foundations repairs from their taxes.

October 17, 2018 In The News

Congressman John B. Larson (CT-01) and Congressman Joe Courtney (CT-02) announced that the Internal Revenue Service (IRS) had provided them with clarifying information that will offer additional tax relief to homeowners with crumbling foundations. First, the IRS has announced that they will allow homeowners to “carry forward” or “carry back” a net operating loss should their casualty loss exceed their annual tax liability.

October 16, 2018 Press Release

(Hartford, CT) – Today, Congressman John B. Larson (CT-01) and Congressman Joe Courtney (CT-02) announced that the Internal Revenue Service (IRS) had provided them with clarifying information that will offer additional tax relief to homeowners with crumbling foundations. First, the IRS has announced that they will allow homeowners to “carry forward” or “carry back” a net operating loss should their casualty loss exceed their annual tax liability.

September 12, 2018 Press Release
Today, Congressman John B. Larson (CT-01) and Congressman Joe Courtney (CT-02) announced that the Connecticut Society of Certified Public Accountants (CTCPA) Executive Director Bonnie Stewart sent a letter to the Internal Revenue Service (IRS) in support or their effort to clarify how homeowners with crumbling foundations can receive federal tax relief through the casualty loss deduction.
July 19, 2018 Press Release

Washington DC – Today, Congressmen John B. Larson (CT-01) and Joe Courtney (CT-02) released the following statement after the House of Representatives approved two amendments to help address the crumbling foundations problem.

May 12, 2018 Event

HOMEOWNERS: Learn More About the IRS Casualty Loss Deduction for Crumbling Foundations Repairs

 

Congressman John B. Larson, Congressman Joe Courtney, and IRS Senior Stakeholder Liaison Joseph S. McCarthy areb hosting a seminar on the IRS Casualty Loss Deduction and the crisis of deteriorating residential concrete foundations

Location:

Ellington High School

February 7, 2018 Press Release
Today, Rep. John Larson (CT-01), Rep. Joe Courtney (CT-02), and Rep. Richard Neal (MA-01) announced updated guidance from the Internal Revenue Service (IRS) that extends the period of time that homeowners have to claim crumbling foundation related repairs on their federal taxes.
November 22, 2017 Press Release
Congressman John Larson (CT-1) and Joe Courtney (CT-2) announced approval of new federal tax relief for homeowners dealing with crumbling foundations today.
September 15, 2017 Press Release

WASHINGTON, DC—Today, Congressman John B. Larson (CT-01) and Congressman Joe Courtney (CT-02) announced three amendments they authored in support of support Connecticut residents impacted by crumbling foundations passed in the House of Representatives. The amendments were added to an omnibus appropriations bill to fund the federal government which passed the House today. These amendments represent the first time that a full chamber of Congress has passed measures related to crumbling foundations in Connecticut.

September 11, 2017 Press Release
Today, Congressman John B. Larson (CT-01) and Congressman Joe Courtney (CT-02) met with Treasury Secretary Steven Mnuchin and Assistant Secretary for Tax Policy David Kautter at the Department of the Treasury headquarters in Washington, D.C. to discuss assistance for north-central Connecticut residents impacted by crumbling concrete foundation.

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