Long story short, I have a property I bought in 2005 for 126k. I sold the property wholesale after a fire for $4500, is there anything I can claim tax-wise to help alleviate some of the loss I took on this property? (which is a very large chunk)
Well what was your insurance claim payout?
100k
You automatically have an insurance loss deduction on your taxes…Beyond that, probably nothing else you can do…I’m not a tax expert, and I don’t play one on TV, but I don’t think you have anything beyond a tax deduction for the actual unreimbursed loss…
The next question to ask is what was the value of the land ?
I am assuming that you bought a SFR for $126K. You purchased package consisting of a dwelling structure and the land it sat on. I am guessing that your basis in the land was around $26K and the value of the structure was $100K. Since the land did not burn down, the insurance company reimbursed you for the full value of the dwelling that was lost in the fire.
If my numbers are accurate, you sold the land for $21500 less than your cost basis. If this was your primary residence, your loss is a personal expense, not a deductible expense. Since you were reimbursed in full by the insurance company, you don’t have a casualty loss deduction for the dwelling structure.
Question is why you did not rebuild with the insurance settlement.
Just how I see it.