State residents whose homes have crumbling foundations are among those who'll be out of luck under the new federal tax overhaul.
About a month ago, the IRS agreed to allow homeowners to offset about 75 percent of their repair costs against their federal taxes.
But Congressman Joe Courtney of Connecticut’s 2nd District said the new $1.5 trillion tax cut passed by Republicans has changed that.
“It limits taxpayers [to] only be able to claim casualty loss deductions for events that the Federal Emergency Management Agency has designated as federal disaster areas,” Courtney said.
Many homeowners are facing what could be $150,000 to $300,000 in repair bills because of the presence of the mineral pyrrhotite in the concrete poured for their basements.
“For many homeowners, they are sort of confronted with an uninsured loss because of the fact that their property casualty insurers are denying their claim and thus, they have to bear the brunt of repairs,” Courtney said.
Suzanne Bates, who researches and writes about Connecticut public policy for the Yankee Institute, agreed that the vote on the federal tax bill was rushed but she said that happened so that lobbyists couldn’t throw extras into the bill.
While she thinks something needs to be done about crumbling foundations, she said people shouldn’t look to the federal government to do it.
“It’s hard to ask for sort of a federal disaster for something like this,” Bates said. “I think it’s more credible to do something at the state level.”
Meanwhile, Courtney said he’s expecting to hear from the United States Department of Treasury by the end of January on how he can use the IRS’s November “Safe Harbor” ruling to benefit those with crumbling foundations.