Generally, you may deduct casualty losses relating to your home, household items, vehicles, and business and income‐producing property on your federal income tax return. You may not deduct casualty losses covered by insurance unless you file a timely claim for reimbursement, and you reduce the loss by the amount of any reimbursement or expected reimbursement.
For property held by you for personal use, once you have subtracted any salvage value and any insurance or other reimbursement, you must subtract $100 from each casualty or theft event. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty or theft losses for the year. Losses on business and income‐producing property are not subject to these reductions.
Casualty losses are generally deducible in the year the casualty occurred. However, if you have a casualty loss from a federally declared disaster, you can choose to treat the loss as having occurred in the year immediately
preceding the tax year in which the disaster happened, and you can deduct the loss on your return or amended return for that preceding tax year. The loss is the “lesser of” the fair market value of the property immediately before the loss reduced by its fair market value immediately after the loss, or the adjusted basis of the property immediately before the loss.