Hi all! I live in NJ and recently my well went bad and I had to have another one dug. Total cost was about $5,150 out of pocket. I have an insurance claim in, but don't don't know how that will pan out.

Is this expense tax deductible? I was given, along with the bill, a notice to sign Form ST-8, Certificate of Exempt Capital Improvement. I am not sure what this means.

Thank you so much for your help!

ST-8 is a sales tax exemption form.

At the federal level, there are only two ways that I can see any deductiion. One, as a casualty loss, but the threshold for that is quite high ($100 plus 10% of AGI), and the other, if part of your home was used for business purposes and you could justify claiming the replacement well was a repair and not a capital improvement.

Since NJ generally limits deductions to medical expenses, alimony, and real estate taxes, there is no relief on your state taxes.

Ira