Larson Receives Commitment from Chairman of Ways and Means Committee for Action on Crumbling Foundations Tax Relief
Washington, D.C. – Today, during a Ways and Means Committee Markup on disaster tax relief, Rep. John B. Larson (CT-01) entered into a colloquy with Chairman Richard Neal (MA-01) on the casualty loss deduction and how it can be used by those with crumbling foundations. Tens of thousands of homeowners in Connecticut and Massachusetts are experiencing crumbling home foundations due to a naturally occurring mineral called pyrrhotite. This mineral causes concrete foundations to crack and deteriorate, rendering homes uninhabitable without expensive repairs, which can cost more than $100,000. Because this isn’t covered by home insurance policies, homeowners must pay out of pocket for repairs. This has resulted in a financial calamity for thousands of homeowners and is affecting entire communities.
Chairman Neal committed to work with Rep. Larson to address the issue in committee.
“In December of 2017, right before the Tax Cuts and Jobs Act became law, Congressman Joe Courtney and I worked closely with the IRS and Treasury Department to allow homeowners with crumbling foundations to take a casualty loss deduction to repair their home’s crumbling foundation. However, the criteria for claiming a casualty loss due to theft or disaster under the 2017 tax law was dramatically limited only to events that receive a Presidentially-issued disaster declaration through the Stafford Act. Currently, homeowners with crumbling foundations can only receive this tax relief through amending their 2017 tax return, as this guidance from the IRS was grandfathered in before the new law could take effect. Taxpayers only have three years to amend their 2017 tax return, so the deadline for homeowners to make these repairs and take this tax relief is quickly approaching.
“Last week Congressman Courtney and I introduced a bill that would restore the personal casualty loss tax deduction to all victims of theft and disaster—not just those who have been fortunate enough to have received a Presidential disaster declaration. I am proud to announce that Chairman Neal agreed to have the Ways and Means Committee address the issue of fully restoring the casualty loss deduction,” said Larson.
“Taxpayers in eastern Connecticut are just as susceptible to floods, fires, falling trees, and other sorts of damage to their property today as we were back in 2017,” said Congressman Courtney. “But unfortunately, due to the Tax Cuts and Jobs Act, taxpayers today can no longer claim a ‘casualty loss’ on their federal taxes unless they are in an area that has received a Presidential disaster declaration. Congressman Larson and I received clarification from the IRS in late 2017 that Connecticut homeowners facing losses due to the crumbling foundations crisis could, in fact, qualify for the federal casualty loss deduction, and that homeowners with crumbling foundations would be grandfathered into the previous tax policy so long as they amend their 2017 tax return within a three year time period permitted by the IRS. Unfortunately, the end of that three year period is quickly approaching, meaning homeowners will no longer be able to receive this federal tax assistance under the law as it exists today. To that end, Congressman Larson and I introduced the bipartisan Casualty Loss Restoration Act, which would allow all taxpayers to take the property casualty loss deduction for theft or property damage, without needing to receive a Presidential disaster declaration. I am grateful that Congressman Larson was able to receive commitment from Chairman Neal of the House Ways and Means Committee, on the record, that he will work to restore this important tax provision, as our bill would do.”