One List That Can Save Your Home
How much are all of your worldly possessions worth? It’s a question you’ve probably never considered but, to be safe, should.
Julian Block is a nationally recognized attorney and leading tax expert. He’s written for outlets including the Wall Street Journal and Financial Planning Magazine on tax issues. Formerly, Block was with the IRS as a special agent and attorney. An author of five books, he wrote his “Home Seller’s Guide to Tax Savings” to provide owners and buyers with an easy guide to the tax liability associated with homeownership.
I spoke recently with Block to get his tax tips. He says one essential step every homeowner must take is to make a list.
Did you know that the IRS allows deductions for the loss or damage of household goods due to burglaries and vandalism? The same goes for “sudden, unexpected or unusual” losses caused by events such as fires, floods and hurricanes. Block says, however, that IRS investigators seriously probe into claims and without accurate inventories, many are denied.
“IRS examiners learned long ago that most people are unable to substantiate their loss deductions because they neglected to keep adequate records and have to rely on what, at best, are estimates, assuming they are even able to recall, for instance, all those valuable and not-so-valuable belongings stored in their closets,” says Block. “So the IRS’s ritual response is to throw out or trim unsupported estimates, a strict approach that has been sustained by the courts in countless decisions,” he says.
How to Take Inventory
Summer’s here. When it comes to taking inventory possessions, now’s the time. An estimated 37 million Americans change households every year, according to U.S. Census Bureau and more than half make their move during the summer months. Aside from that, with the kids out of school, all hands are on deck to help the projects move faster. To help list and evaluate your possessions, the IRS has provided a handy guide in form of its ”Publication 2194, Disaster Losses Kit For Individuals.”
“It includes a handy workbook with schedules for listing, among other things, clothing, jewelry and a residence’s contents on a room-by-room basis,” Block says. ”The schedules for rooms and other areas have separate sheets for the entrance hall, living room, dining room, kitchen, bedrooms, garage, and other sections. Each sheet lists belongings generally found in a specific area.” Pay special attention to details including: the number of items, date acquired, cost and value before the loss. In the event of a tragedy like a fire, you’ll need to amend the items listed with their value after the loss, decrease in value, and amount deductible as a loss.
Do It Digitally
If taking a manual inventory sounds too tedious, don’t fret. Thanks to modern technology, there’s an app for that – and it’s free. Both the Insurance Information Institute and MoveInsure have no-cost inventor applications that allow you to snap a photo of each room in your home and tag items with all the information you’ll need for a proper claim.
Photo Courtesy, StockMonkeys.com.
