IRS delivers: Hail 'Revenue Procedure 2010-36' for allowing tainted drywall deduction
Wake up and good morning. Some practical news today. After months if not years of federal fiddling over the epidemic of Chinese drywall "disease" affecting thousands of Florida homes, the Internal Revenue Service (of all agencies) offers some help. The IRS now says it will allow taxpayers with defective drywall in their houses to deduct the cost of repairs and replacement of damaged appliances. (AP photo: A homeowner points to metal corrosion on her air conditoner system from tainted drywall.)
The IRS has even given the new 6-page ruling a sexy name: Revenue Procedure 2010-36. Here it is, if you dare to peek.
Tainted drywall typically from China was used during the recent housing boom across Florida and in other states. The drywall emits a sulfur-like smell, often sickens homeowners and can corrode metals -- especially those in air conditioning systems. Folks who bought such homes unknowingly are stuck with massive drywall replacement repair bills (if they can even afford them), a legal quandary with their home builders, or are stuck with a dud house no one else will buy.
According to a New York Times story, the new rule lets taxpayers deduct so-called casualty losses — generally the cost of repairs from a sudden or unusual event — in the year in which the loss occurs, as long as the losses are not compensated by insurance or other parties. But there are several other restrictions: taxpayers must itemize their federal returns to claim the deduction. And deductions are allowed only on amounts that exceed $500, and on amounts that exceed 10 percent of the taxpayer’s adjusted gross income for the year.
Here's how the IRS describes its new ruling.
This is, of course, no bailout. As the NYTimes story correctly notes, "In the end, the tax break will help only those homeowners who can afford the costly repairs." But it's a lot better than nothing, which is what the feds were offering before.
-- Robert Trigaux, Times Business Columnist