By Jim Melican, GSAC Board Member
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There was very good news for condo owners coming out of Washington last week. On December 4, the Senate finally passed, without objection and by voice vote, the Federal Disaster Tax Relief Act (H.R. 5863), which had passed the House of Representatives last May by a vote of 382-7. The legislation was signed into law by President Biden on Dec. 12.
The legislation extended the applicability of a since lapsed 2020 law which, in the case of a qualified disaster as declared by the President, permits a taxpayer to deduct any casualty losses in excess of $500, rather than being limited only to losses which exceed 10% of adjusted gross income. Furthermore, taxpayers can claim those losses even if they utilize the standard deduction rather than itemizing all of their deductions.
While the IRS regulations and rulings on this subject are complex, the consensus is that condo owners who incurred special assessments due specifically to Hurricane Ian-related damages to association property can deduct as a casualty loss the amount of the assessment which exceeds their share of any insurance recoveries that the condominium association is able to realize. Depending on the year in which the association’s assessment was collected, it might be necessary to file an amended return. Anyone feeling that they are eligible should consult with their own tax advisor.
The GSAC board has been actively advocating for the passage of this legislation since it was introduced nearly two years ago. We have been in frequent contact with Senator Scott’s staff and were the prime mover in persuading the Naples City Council to write to both Senator Scott and Senator Rubio. The lion’s share of the credit for negotiating its ultimate passage goes to Congressman Greg Steube of Sarasota, whose legislative maneuverings freed it from the limbo to which it had been consigned.
