How do you figure a casualty loss on personal property?

The three-step loss formula

Publication 547 opens the arithmetic with a short list. First, determine your adjusted basis in the property before the casualty or theft, which is generally what you paid plus improvements, less certain adjustments. Second, determine the decrease in fair market value, which is the difference between what the property could have sold for to a willing buyer immediately before the event and immediately after it. Third, take the smaller of those two numbers and subtract any insurance or other reimbursement you received or expect to receive. That remainder is your loss before the personal-use limits. Using the smaller figure matters: if you paid $150 for a coin that was worth $1,000 when it was stolen, the publication says the theft loss is $150, because basis is the lower number.

Fair market value after a theft is treated as zero, since you no longer have the property. After damage, you generally need a competent appraisal of the difference, though the cost of repairs actually made can stand in for it when five conditions are met (see the records page).

Who can deduct a personal casualty loss now

The most important sentence in the current edition is the limitation: for tax years beginning after 2017, an individual’s casualty or theft loss of personal-use property is deductible only if it is attributable to a federally declared disaster. Personal-use property is anything other than business property or income-producing property. A kitchen fire, a burglary or a car crash that is not part of a declared disaster therefore produces no deduction by itself. The publication states one exception: if you have personal casualty gains for the year, losses that are not tied to a declared disaster can offset those gains. The edition read here does not state an end date for this limitation, and it was written for 2025 returns, so confirm the rule for your tax year in the current publication and the Form 4684 instructions.

Not every damaging event counts as a casualty at all. The publication defines one as damage, destruction or loss from an identifiable event that is sudden, unexpected or unusual. Damage from a family pet, progressive deterioration such as termites, steady wear from weather, and accidentally breaking glassware under normal conditions are not deductible casualties.

The $100 rule and the 10% rule

Once you have the loss for a federally declared disaster, two reductions apply in order. The $100 rule subtracts $100 from the total loss for each separate event, no matter how many items the event damaged. A tornado that destroys a boat and its equipment is one event and one $100. Then the 10% rule subtracts 10% of your adjusted gross income from the total of all your federal casualty losses for the year. A joint return is treated as one person for both rules. The publication’s Table 2 spells out who reduces separately: separate returns, jointly owned property owned by unmarried co-owners, and house guests each apply the rules on their own.

Losses that meet the publication’s definition of a qualified disaster loss follow different numbers: the $100 becomes $500 and the 10% rule does not apply. That category is limited to specific disasters and dates, which the disaster losses page lays out.

Worked example from the publication

In August a storm that was a federally declared disaster destroyed a pleasure boat that cost $18,500. Its value just before was $17,000, and the owner salvaged and sold the motor for $200, which counts as the value after. There was no insurance and AGI was $70,000. The decrease in value is $16,800 ($17,000 minus $200), which is smaller than the $18,500 basis, so the loss is $16,800. Subtract $100 for $16,700, subtract 10% of AGI ($7,000), and the casualty loss deduction is $9,700. Type those figures into the calculator to check it.

A second example shows the limit biting. A tropical storm that was a federally declared disaster damaged a house for a $2,000 loss after insurance, and AGI was $29,500. After the $100 rule the loss is $1,900, but 10% of AGI is $2,950, so the deduction is zero. With more than one declared-disaster event in a year, each loses $100 first and then only one 10% reduction is taken on the total: a $1,800 car loss and a $2,100 basement loss on $25,000 of AGI become $1,700 plus $2,000, minus $2,500, for a $1,200 deduction.

Item by item, except for your home

When one event damages several items of personal property, you figure the loss on each item separately and then add the results. The exception is real estate you own for personal use: the land and all improvements, such as the house and ornamental trees, are treated as one item. Because every item uses its own smaller-of test, a worthless old item with a small basis can contribute only its basis even if it was worth more. For the real-property method with the publication’s cottage and hurricane examples, see the storm damage page.

Where it goes on the return

For personal-use property the publication says a loss is reported on Form 4684 and carried to Schedule A (Form 1040), and a gain is reported on Form 4684 and Schedule D. Because the deduction is an itemized deduction, it only helps if your itemized total beats the standard deduction, which the standard vs itemized calculator can test. Qualified disaster losses are the exception and can be claimed on top of the standard deduction.

Sources

• IRS Publication 547, Casualties, Disasters, and Thefts (2025): Casualty; Figuring a Loss; Deduction Limits. Read November 2, 2026.

Edition read: Publication 547 (2025), for use in preparing 2025 returns. Dollar limits and dates on this page are the figures printed in that edition; legislation enacted after it was published is not reflected, so check the current publication, Form 4684 and its instructions for your tax year. This page summarizes the publication and does not replace it.