Q: Questions about determining casualty loss, principal residence during a declared federal disaster.
Disaster declaration FEMA-4618-DR-PA. Will IRS allow me to use the retrospective appraisal of principal residence to determine the FMV of the property immediately prior to the casualty loss? Determining a loss based on Safe Harbor methods available under Revenue Procedure 2018-08, 2018-2 I.R.B. 286 does not work so well as the property was sold before any restoration work on the house was begun.
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A:
Yes, you can use a retrospective appraisal to determine the fair market value (FMV) of your principal residence immediately before the casualty loss, especially when the property was sold before restoration. The IRS allows for this approach, particularly when other Safe Harbor methods under Revenue Procedure 2018-08 don't adequately capture the loss.
It's important that the appraisal is conducted by a qualified appraiser who can accurately assess the property's value as it was just before the disaster occurred. This appraisal will help substantiate your casualty loss claim on your tax return.
Ensure you keep thorough documentation, including the appraisal report, the details of the sale, and any other relevant information that demonstrates the property's condition and value at the time of the loss. This will be essential if the IRS reviews your claim.
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