Anyone who has ever experienced a home termite infestation can tell you that repairing the damage caused by these destructive pests can be expensive. Eradicating a home of termites is one thing, but paying for the damage is a different matter. Paying a pest-control professional for removing termites from a home is easily worth the manageable cost. The financial burden involves replacing the damaged property once the infestation has been eliminated. The cost of repairing damage to a home is often tax deductible. However, whether or not home repairs are deductible depends on what caused the damage to a home in the first place. Unfortunately, when the cause of property damage happens to be termite-related, most homeowners will find that repairs are often not tax deductible.
It would be reasonable to assume that the costs incurred from termite damage would be considered tax deductible. After all, termite damage does not occur as a result of a property owner’s irresponsibility. For example, how is termite damage different from hurricane damage? When it comes to repairing damage caused by natural disasters, the IRS will often consider the cost of these repairs to be tax deductible. This is why so many taxpayers are shocked to learn that the cost of termite-related repairs are not tax deductible.
The problem comes from the wording of IRS policy. According the law, the cost of property repairs are only tax deductible if the damage was “sudden, unusual, or unexpected.” It is difficult for taxpayers to argue that termite damage was “sudden.” The IRS typically considers termite damage repairs to be “maintenance costs.” This came as a surprise to one couple who spent eight thousand dollars on termite-related repairs to their home. The couple was infuriated when their accountant broke the bad news. One way to avoid a similar situation yourself is to have regular termite inspections conducted within your home.
Have you ever found that insect-related damage was not tax deductible? Do you think that it is fair to consider termite-related damage a result of a failure to “maintain” a home as opposed to an unavoidable “casualty loss?”