Federal Bill Sets Up Tax Relief For Crumbling Foundation 'Losses'

NORTH CENTRAL, CT — U.S. Rep. Joe Courtney (D-CT) Tuesday led the charge to announce what he termed a bipartisan bill called the Casualty Loss Deduction Restoration Act – legislation that would deliver financial relief to Americans who suffered losses from unexpected disasters, including crumbling foundations caused by the mineral pyrrhotite.

The bad foundations have affected thousands of homes in north central and parts of eastern Connecticut.

Prior to 2018, taxpayers who suffered an unexpected disaster—including a crumbling foundation— were eligible for tax relief through the casualty loss deduction for uninsured casualty losses, Courtney said. Since 2018, only taxpayers whose disaster received a Presidential disaster declaration through the Federal Emergency Management Agency — a high threshold to meet—were able to take a loss and receive tax assistance, Courtney said.

He added, "This has left many homeowners unable to claim this important deduction for unreimbursed costs related to fixing their home."

The Casualty Loss Deduction Restoration Act — co-sponsored by Courtney, Rep. John Larson (D-CT), Rep. Dan Crenshaw (R-TX), Rep. Mike Rogers (R-AL), Rep. Julia Brownley (D-CA), Sen. Richard Blumenthal (D-CT), Sen. Chris Murphy (D-CT), Sen. Ed Markey (D-MA), Sen. Elizabeth Warren (D-MA), and Sen. Cassidy (R-LA) — would restore the federal casualty loss deduction for all taxpayers with a casualty loss—not just those who had received a federal disaster declaration.

"Since the crumbling foundations crisis showed its face, my office has worked non-stop to find solutions and deliver support for affected communities. Unfortunately, as eastern Connecticut residents made clear last week in Vernon, homeowners have felt the push and pull of progress in Congress, and many have been left with exorbitant costs after a key method of relief—the casualty loss deduction—was eliminated in 2018," Courtney said. "Now, with our new bill, homeowners would once again be able to claim a casualty loss deduction and receive tax relief. Thanks to strong bipartisan support among lawmakers and grassroots-advocates from across the country, I am confident we can advance this bill and support families who have incurred losses at no fault of their own."

Here us what other lawmakers and organizations had to say:

Larson: "Thousands of Eastern and Central Connecticut homes have been plagued with crumbling foundations, through no fault of their own, leaving families with exorbitant costs to replace their foundation and make necessary home repairs. After hearing from area homeowners, I worked with Rep. Courtney and the IRS to ensure they could deduct these costs from their federal taxes. Unfortunately, Congressional Republicans eliminated this possibility in their 2017 Tax Law. I am proud to partner with Rep. Courtney and a bipartisan group of legislators to introduce this legislation today to restore the full federal Casualty Loss Deduction so impacted homeowners can once again deduct these costs on their taxes."

Blumenthal: "This bill is about simple justice and fairness to families whose crumbling foundations are decimating not only their homes, but their security and financial foundations. This initiative would provide relief to all who have suffered damage, enabling them to deduct losses from federal income taxes. We know that disasters can strike at any time and aren’t just limited to big events like tornadoes or hurricanes. Our bill is a commonsense and practical measure that will provide some financial relief to all Americans suffering from the devastating consequences of events outside of their control."

Murphy: "Crumbling foundations have caused a massive financial and emotional burden for homeowners across eastern Connecticut through no fault of their own. The federal government should be doing all it can to help these homeowners make repairs, rather than forcing families to navigate a bunch of red tape. This commonsense bill is a necessary first step to make sure homes and the investment they represent for families in eastern Connecticut are safe, and I’ll continue fighting for the federal funding we need to address this crisis."

The Home Builders & Remodelers Association of Central Connecticut: "The Home Builders & Remodelers Association of Central Connecticut strongly urge the support and passage of the Casualty Loss Restoration Act. There are more than 3,500 homeowners who have been impacted by crumbling foundations due to the presence of pyrrhotite in the stone aggregate in their foundations. This has resulted in families being displaced for months and suffering significant financial distress while repairs are made to their homes. The passage of this Act will allow them to deduct up to $50,000 in associated repair costs and try to make the families whole following this significant loss. The passage of the Casualty Loss Reduction Act is critical to the thousands of families in northeastern Connecticut who have, and will be, repairing the most valuable asset they own – their home."

Connecticut Foundation Solutions Indemnity Company: "On behalf of all of us at CFSIC, I express our wholehearted support for the proposed Casualty Loss Deduction Restoration Act, which we understand, if passed, would allow taxpayers to claim up to $50,000 in a casualty loss deduction from 2018 through 2025 (the years that the Tax Cuts and Jobs Act is in effect) and permanently claim the full deduction after 2025. … This Act would provide needed financial relief to those needy and deserving families."

For a fact sheet on the bill, click here.