Casualty Loss Deduction for Your Home in 2026: Form 4684 Rules

What changed, in the order Congress changed it

Most of the pages that rank for this topic were written before one or both of two laws. The text, in order:

Two consequences are easy to miss. First, the 2025 edition of IRS Publication 547 and of the Instructions for Form 4684 describe qualified disaster losses with the older windows (a declaration between January 1, 2020 and September 2, 2025, and an incident period that ended no later than August 3, 2025). The IRS FAQ reviewed July 21, 2026 repeats them. Public Law 119-108 came afterwards, and its text is a rolling window: any major disaster whose incident period begins on or after December 28, 2019 and before January 1, 2027. Second, we found only the 2025 edition of the Form 4684 instructions; no 2026 edition was posted when we looked, so every line reference below is to the 2025 form.

Which floor applies: the declaration decides

The first row requires the loss to arise in the “qualified disaster area” and be attributable to that disaster (165(h)(6)(C)(i)). Publication 547 adds that a federally declared disaster “includes a major disaster or emergency declaration”, which is why an emergency-only declaration sits in the second row: the qualified definition in 165(h)(6)(C)(ii) names a major disaster declared under section 401 of the Stafford Act. FEMA also issues fire management declarations (FM); Publication 547 does not list them among the federal declarations, and we did not find IRS text either way, so treat a wildfire that has only an FM declaration as unconfirmed and ask a CPA.

The 2026 list: which events are in the qualified column

FEMA's OpenFEMA DisasterDeclarationsSummaries file, queried on October 22, 2026 for incident begin dates on or after January 1, 2026, returns 45 major disaster declarations, 29 emergency declarations and 63 fire management declarations. The major disasters cover 28 states and territories. Selected rows, with the number of designated areas (counties or tribal areas) in the dataset:

The full 45 rows are in the CSV. What the list says for the states where home values are highest:

A reader in Florida hit by Hurricane Isaias therefore holds, today, a loss attributable to a federal emergency declaration, which falls in the $100 and 10% row. A later major disaster declaration for the same event would move it to the $500 row; the dataset can change, so check FEMA for your event before you plan around it. The IRS relief pages are a separate matter: they postpone filing and payment dates, and say nothing about the size of the deduction. One that expires soon: for Michigan (4925-DR) the IRS postponed various deadlines to November 2, 2026.

Worked cases: a $900,000 home, $300,000 of AGI, married filing jointly

All figures are our arithmetic from 26 U.S.C. 165(h). Assume the house was worth $900,000 before and $780,000 after a storm (a $120,000 drop in value) and its adjusted basis is $600,000, so the loss is the smaller of the two, $120,000, less insurance (Publication 547: “From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement”). Case A: insurance pays $96,000, leaving a $24,000 gap (a hurricane or wind deductible, for example). Case B: no insurance.

The 10% floor is a hurdle, not a deduction: it is why most non-qualified casualty losses on a high-income return produce nothing. The loss after insurance that must be exceeded before any deduction (our arithmetic: 10% of AGI plus $100):

For a home that is destroyed rather than damaged, the question flips. If the same $600,000-basis home is destroyed and insurance pays $1,000,000, there is a $400,000 gain. Publication 547 lets you exclude up to $250,000 ($500,000 if married filing jointly) if you owned and lived in the home for 2 of the 5 years before it was destroyed. Joint filers who meet the test owe tax on $0 of it; a single filer has $150,000 above the exclusion, which can be postponed by buying replacement property that costs at least the proceeds minus the excluded gain, $750,000 here (our arithmetic). For a main home in a federally declared disaster area the replacement period runs 4 years after the close of the first tax year in which gain is realized, otherwise 2. Rental and business property follow different rules; see our page on the 1033 exchange for rental property and on the home sale exclusion.

Rules that change the number

• Measure the loss on the whole property. For personal-use real property, land, house and landscaping are one item; use the smaller of adjusted basis or the drop in fair market value (Publication 547). Furniture and a car are figured item by item.
• Appraisal or safe harbor. Rev. Proc. 2018-08 allows an estimated repair cost method for losses of $20,000 or less, a de minimis method for $5,000 or less, an insurance method, and, for federally declared disasters, a contractor safe harbor and a disaster loan appraisal method (Publication 547). A safe harbor needs a statement attached to Form 4684.
• Repairs are evidence, not the loss. The cost of repairs counts as a measure only if the repairs are made, are necessary, are not excessive and do not leave the property worth more than before.
• File the claim. Section 165(h)(4)(E) takes an insured loss into account only if the individual files a timely insurance claim. Form 4684's line 3 instruction says to enter expected reimbursement “whether or not you are filing a claim”.
• One floor per event, one AGI floor for the year. The $100 or $500 applies once per casualty, even if many items are hit; the 10% applies to the total (Publication 547, Table 2). A married couple filing jointly counts as one individual; co-owners who are not spouses each apply the floors to their own share.
• Second home versus rental. A second home you do not rent is personal-use property and follows everything above. A rental you destroyed is business or income-producing property: Publication 547 figures the loss as adjusted basis minus salvage minus reimbursement, with no $100 or 10% floors. If a home is part rental or has a business office, Form 4684 splits it between Section A and Section B. Insurance is a separate decision; see landlord insurance and repairs versus improvements for the cost side.
• A demolition order counts. If a state or local government orders a home in a federally declared disaster area torn down or moved within 120 days of the declaration, because the disaster made it unsafe, the loss is treated as a casualty loss (165(k)).
• Basis falls. The deductible loss and insurance reimbursements reduce your basis in the home, which matters when you later sell; see our page on mortgage interest and second-home limits for the other side of owning a second property.

Which return, and by when

For a federally declared disaster you may elect to take the loss on the return for the year before the disaster (165(i)(1)). Publication 547 gives the deadline as six months after the regular due date, without extensions, of the return for the disaster year. For a calendar-year taxpayer with a 2026 disaster that is October 15, 2027 (our arithmetic: six months after April 15, 2027). The same rule gave October 15, 2026 for a 2025 disaster claimed on a 2024 return, which has passed. If you elect, you amend the earlier year on Form 1040-X and attach Section D of Form 4684; a refund of last year's tax is the usual reason to do it. The text of 165(i)(5) is limited to “federally declared disaster” and was not amended in 2025 to add State declared disasters, so on our reading a State declared disaster loss is claimed for the year it occurs. Check that with a CPA before relying on a carryback.

For a qualified disaster loss, Form 4684 line 11 asks for $500 rather than $100, and line 15 produces the net qualified disaster loss, which goes on Schedule A line 16 labelled “Net Qualified Disaster Loss”. A filer who takes the standard deduction enters the standard deduction amount on the same dotted line with the description “Standard Deduction Claimed With Qualified Disaster Loss” (Instructions for Form 4684). The line numbers are from the 2025 edition.

What a reader can do with this

• Find your event in the table or at FEMA. Write down the declaration number (DR or EM), the incident period and whether your address is in a designated area. Form 4684 asks for the DR or EM number and the ZIP code.
• File the insurance claim first and keep the paperwork. The deduction is only what the policy does not pay, and only if the claim was filed.
• Run the three numbers before you decide the loss is worth tracking: loss after insurance, AGI, and the declaration type. If the loss after insurance is below 10% of AGI plus $100 and the event is not a qualified major disaster, expect $0.
• Do not assume a State declaration helps. On the statute's text it needs the Governor and the Secretary, and we found no published list or procedure. Ask the preparer whether Treasury has issued one before you rely on it.
• Keep before-and-after photographs, the appraisal or safe harbor statement, and the insurer's loss report. The IRS safe harbors need specific documents.
• If the home was destroyed, work the gain first. The exclusion and the 4-year replacement period may matter more than any loss.

This is a tax computation with a classification risk (which declaration, which floor) and a filing-year choice. The professionals who can settle it are a CPA or enrolled agent. The box below is a referral to financial advisers for readers who also want to look at insurance proceeds, a rebuild or a sale as part of the whole plan.

FAQ

Sources, read and saved on October 22, 2026: 26 U.S.C. 165 (Legal Information Institute, Cornell Law School, with the editorial notes on Public Laws 119-21 and 119-108); Public Law 119-21 (July 4, 2025), section 70109 and section 70438, GPO via govinfo.gov; Public Law 119-108 (September 11, 2026), GPO via govinfo.gov; IRS Publication 547 (2025), Casualties, Disasters, and Thefts; Instructions for Form 4684 (2025); the IRS page “Wildfire Relief Payments and Casualty Losses frequently asked questions” (reviewed July 21, 2026); the IRS page “Tax relief in disaster situations” (reviewed October 14, 2026) and the IRS Michigan relief announcement for 4925-DR; FEMA OpenFEMA DisasterDeclarationsSummaries (query run October 22, 2026, incident begin dates on or after January 1, 2026). Worked cases are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.