January 10, 2018

IRS affirms relief for CT crumbling-foundation victims

HBJ PHOTO | Bill Morgan
HBJ PHOTO | Bill Morgan
South Windsor resident Kristen Cole is one of many homeowners dealing with cracks in her home’s foundation.

Some Connecticut homeowners plagued by crumbling foundations remain eligible for tax relief despite recent federal tax reform, two Connecticut congressmen say.

John B. Larson (D-1st District) and Joe Courtney, (D-2nd District) on Wednesday released a letter from the Internal Revenue Service in response to their and homeowners' concerns about the impact of tax reform on property owners' ability to deduct the cost of foundation repairs on their federal tax returns.

In November, the IRS declared the availability of federal tax relief for qualified Connecticut homeowners who have repaired their foundations. However, some homeowners have not yet implemented repairs, and there was concern about their eligibility for tax relief, Larson and Courtney said.

In addition, federal tax reform passed in December temporarily limited victims' access to foundation tax relief.

"As the IRS confirmed in its letter, qualified taxpayers who paid to repair damage to their homes in 2017 or in prior open tax years will still be able to deduct the cost of those repairs as a casualty loss on their 2017 returns,'' Larson and Courtney said in a statement.

"This is welcome confirmation for those homeowners who have already completed repair work on their homes and will soon begin to prepare their taxes," they said.

For those who have not yet made repairs or are just now discovering they are victims, the lawmakers said ongoing talks with the IRS and the Treasury Department indicate "there may be additional 'transitional relief' that could help other homeowners in 2018 and beyond.''

"We will continue to work closely with the IRS and the Treasury to explore options to assist homeowners in the weeks ahead,'' Larson and Courtney said, "and do all we can to ensure that as many homeowners as possible can seek tax relief in light of the new tax law."

Still, they urged homeowners to consult with a tax preparer to see if they qualify for the deduction and determine how to use it on their 2017 or open year amended returns.

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