Protecting What's Right

The Internal Revenue Service said that it would permit taxpayers with defective drywall in their homes to deduct the repair and replacement of damaged appliances. This tax break is the first significant response from the federal government to provide financial help to the thousands of homeowners nationwide struggling with the defective drywall.

While this ruling is good news, it is not a panacea –this tax break will only help homeowners capable of affording the costly drywall repairs, most likely a small percentage of those affected.

Taxpayers can only deduct the casualty losses, including the cost of repairs from an unexpected event, in the year in which the loss occurs – as long as insurance or other parties do not compensate the losses. Taxpayers must also itemize their federal returns to claim the deduction.

A federal court judge in Virginia has ruled that a Virginia homeowner’s insurance policy did not cover damages caused by Chinese drywall.  Judge Robert G. Doumar of the U.S. District Court in Norfolk found that the policy excluded damages caused by latent defects, faulty materials, corrosion and pollution.

This is the first decision in many cases involving insurance companies that have refused to cover damage caused by toxic Chinese drywall.  Thousands of homeowners across the U.S. have incurred damage to their homes caused by the defective drywall, including corrosion of wiring and other household components and appliances as well as health complaints.

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