Taxpayers whose homes and belongings were damaged by Hurricane Sandy will get some tax relief.
There is a limit on the deduction. Here is how it works: First, you must subtract $100 from the amount of your loss. After you do that, your deduction is the amount of your losses that are greater than 10% of your adjusted gross income. Here is a simple example: If your adjusted gross income is $100,000 and your losses are $30,000, your deduction would be $19,900.
If your losses occurred in an area that the President has declared as a disaster area, then you can claim those losses in 2011 or 2012. In other words, it is best to choose the year in which you had a lower adjusted gross income. To be on the safe side, keep a file with documents that support your deduction. For example, anything that shows the value of your property both before and after the disaster such as documents from your mortgage holder or property tax records.