Real Estate NewsDisaster Relief For Manhattan Residents
If you live near the World Trade Center, hit last week by terrorists piloting hijacked jetliners, a federally-designated disaster area could make you eligible for special assistance and tax relief.
Hours after terrorists reduced the World Trade Center"s 110-story twin towers to rubble injuring and killing thousands, President Bush declared as a disaster area portions of Bronx, Kings, New York (boroughs of Brooklyn and Manhattan), Queens and Richmond counties. Adjacent Lower Manhattan neighborhoods include the historic areas of Little Italy, Chinatown, Soho and Battery Park City as well as Seaport, Civic Center and Tribeca communities, among others.
FEMA assistance can include funds to help meet temporary housing needs, grants for medical, funeral and other serious disaster-related expenses, and low-interest loans from the U.S. Small Business Administration to cover residential and business losses not fully compensated by insurance or other funds. Unemployment assistance, funding for crisis counseling services and federal funds for debris removal is also available.
Residents and business owners who sustained losses in the designated counties can begin the disaster application process by calling 1-800-462-9029, or 1-800-462-7585 (TTY) for the hearing and speech impaired from 8 a.m. to 6 p.m. daily.
Tax Relief Too
Taxpayers who live in areas declared federal disaster areas also have the option of taking a casualty loss deduction on an amended 2000 tax return now, or you can opt to wait until you file your 2001 tax return.
Without a federal disaster declaration, taxpayers don"t have the filing option, but can file for a casualty loss deduction with the tax return of the year in which the loss occurred.
The deduction is based on the decline in the fair market value of property due to damage or destruction by a sudden, unusual or unexpected event, including acts of terrorism.
You may be eligible for the deduction to the extent that insurance or other forms of compensation don"t cover the cost of disaster damage and destruction to your property.
As is the case with deductions for mortgage insurance and property taxes, casualty loss is an itemized deduction included on Schedule A. Schedule A deductions are subtracted from your adjusted gross income.
State tax laws vary on casualty loss deductions and because casualty loss deductions often involve large sums and complex tax calculations, you should seek the help of a knowledgeable tax professional to complete any tax return -- state or federal.
"Prior to 1982 I used to see a lot of audits in casualty losses because of small fender bender type claims. In 1982 the law changed to say the amount of the loss has to exceed 10 percent of your adjusted gross income, that eliminated small casualty loss deductions," says Marie Sternberger an enrolled agent in Sunnyvale, CA.
Use IRS Form/Instructions 4684 ""Casualties and Thefts"" to calculate casualty losses. IRS Publication 584, "Casualty, Disaster, and Theft Loss Workbook" offers additional details for calculating your loss. With your state return, attach copies of the federal Schedule A and related casualty-loss forms and worksheets.
The IRS also offers an on-line "Disaster Area Losses Discussion"
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