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Congressman John Larson

Representing the 1st District of Connecticut

Larson, Courtney Release IRS Letter Confirming 2017 Deduction for Homeowners with Crumbling Foundations

January 10, 2018
Press Release

WASHINGTON, DC -- Today, Rep. John Larson (CT-01) and Rep. Joe Courtney (CT-02) released a letter from the Internal Revenue Service (IRS) responding to their questions about the impact of the new tax law on crumbling foundations tax relief announced late in 2017. The letter states that tax relief remains available for some homeowners with crumbling foundations and the potential for further transitional relief for those impacted by the new tax law.

Click here to read the letter sent to Larson and Courtney from the IRS

“As the IRS confirmed in its letter, qualified taxpayers who paid to repair damage to their homes in 2017 or in prior open tax years will still able to deduct the cost of those repairs as a casualty loss on their 2017 returns. This is welcome confirmation for those homeowners who have already completed repair work on their homes and will soon begin to prepare their taxes,” said Larson and Courtney. “However, given that the revenue procedure was released at the end of November, many homeowners did not have time to make the necessary repairs by the time the new tax law was signed and 2017 ended. Many homeowners are only now discovering the extent to which their home foundations have been damaged, or have yet to make plans to repair their homes.

“As noted in the IRS letter and in follow-up conversations that our offices have had with IRS and Treasury officials, there may be additional ‘transitional relief’ that could help other homeowners in 2018 and beyond. We will continue to work closely with the IRS and the Treasury to explore options to assist homeowners in the weeks ahead, and do all we can to ensure that as many homeowners as possible can seek tax relief in light of the new tax law.”

Background:

Last November, the IRS issued Rev. Proc. 2017-60 to allow 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.

The new tax law, signed into law in December, temporarily limits the applicability of Section 165. Under the law, beginning in tax year 2018 only taxpayers who suffer damage related to a presidentially-declared Stafford Act disaster may deduct their property-casualty losses. This provision expires in 2025.

The December 21 letter from the IRS confirms that homeowners who have already completed repairs to their home would be able to claim the costs on their federal tax returns for 2017, or any open prior year. Reps. Larson, Courtney, continue to work with the IRS and Treasury to determine prospective eligibility.

Homeowners should consult with a qualified tax preparer to see if they qualify for this deduction and determine how to use it on their 2017 or open year amended returns.

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