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We have had major water damage, water pipe failed, to our home. It is costing about $50,000 to repair/renovate. About $1500 of that is sales tax on materials and appliances. We have $5000 deductible, the remainder is covered by insurance. Can we deduct the sales tax or any portion of it because it is less than our deductible?

The $5000 unreimbursed expense is potentially deductible as a casualty loss. However, the casualty loss rules limit your deduction to losses greater than (approximately) 10% of your AGI, so it's not likely you'll see any benefit. If the damage was related to one of the hurricanes, you may be able to waive the AGI limitation.

In any case, the sales tax would probably qualify for addition to the table amount for your state. Compare this to your state income tax payments to determine the better deduction.


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