Appraisals and Other Evidence

A professional appraisal is often the best evidence you can obtain of the value of property before and after a casualty. Ideally, the appraiser would be someone who was at least passingly familiar with your property before and after the casualty, who has adequate knowledge of sales of comparable property in the area, who is familiar with conditions in the area, and who uses conventionally accepted appraisal methods.

Save Money The cost of obtaining an appraisal is not itself part of your casualty loss, but it can be deducted as a miscellaneous itemized deduction on Schedule A of your individual income tax return (Form 1040).

While professional appraisals are nice to have, they are not always required, especially for inexpensive items. An insurance adjuster's appraisal may do just as well. If you sell the property after the casualty, the sales price will be evidence of its fair market value (FMV).

For cars, you can often rely on "blue books" or similar sources that provide retail values for cars by age, make, model, condition, mileage, etc.

For property that has been damaged, you can use the cost of cleaning it up or repairing it to bring it back to its condition before the casualty as a measure of the difference in fair market value before and after the casualty, so long as the repairs do not actually increase the property's value above its pre-casualty value. Finally, if you have photographs (before and/or after), videotapes, an insurance inventory, any receipts or other documentation, they may all be useful in establishing the property's value.

Work Smart You may find the IRS's free Publication 584, Nonbusiness Disaster, Casualty, and Theft Loss Workbook, helpful if your home and personal belongings have been largely destroyed by a disaster. It goes through the house room by room and prompts your memory with lists of items commonly found in a typical home, which can also be useful in filing your insurance claim. IRS Publication 584-B (12/2011), Business Casualty, Disaster, and Theft Loss Workbook, provides similar worksheets for business property. You can download a copy from the IRS website or order one by calling 1-800-TAX-FORM.