HARTFORD, CT — Thanksgiving came early for thousands of Connecticut homeowners with crumbling foundations.
That’s because the U.S. Treasury Department announced Wednesday that they will allow homeowners to deduct the cost of repairs to their homes from their federal taxes.
U.S. Reps. Joe Courtney and John B. Larson helped get the Treasury Department to issue the ruling.
Larson said it’s the first recognition by the federal government that the crumbling foundation problem is “unique and through no fault of their own.”
The tax relief is not a silver bullet and it won’t help every homeowner, but it’s a start, Larson said. When combined with the changes the state legislature approved last month as part of the budget, it means these homeowners can begin to recoup the losses they’ve experienced over a period of years.
Anywhere from hundreds to tens of thousands of homes have been impacted. Insurance carriers have refused to cover the damages for homeowners who experience the problems, which are thought by some to be tied to high levels of a mineral called pyrrhotite within the concrete.
As of December 2016, 567 homeowners had reported their crumbling foundation issue to the Department of Consumer Protection. The Office of Fiscal Analysis says that over the next 15 years affected municipalities could lose about $40 million to $80 million in tax revenue because of the problem. OFA estimates that 20,000 homes could be impacted, while other groups say it’s closer to 30,000 homes.
Last November, then FEMA administrator Craig Fugate said the presence of pyrrhotite does not constitute a natural disaster.
“While the mineral and chemical reactions may be naturally occurring, the mixing of concrete and the placing of these foundations are man-made events and do not constitute a natural catastrophe as the term is used in the Robert T. Stafford Disaster Relief and Emergency Assistance Act,” Fugate wrote.
Courtney said they are hopeful the Treasury Department’s ruling will help the state in getting a disaster declaration at some point in the future.
“This tax guidance adds a powerful new tool to the toolbox of options for homeowners and communities looking for way to get their arms around this extensive and long-term problem for our region,” Courtney said.
The Treasury ruling states that “In view of the unique circumstances surrounding the damage caused by deteriorating concrete foundations containing the mineral pyrrhotite, the Treasury Department and the Service concluded that it is appropriate to provide a safe harbor method that treats certain damage resulting from deteriorating concrete foundations as a casualty loss and provides a formula for determining the amount of the loss.”
He said when they learned they would be getting a favorable ruling from the Treasury Department they were told there was internal debate about whether the crumbling foundation issue fit the precedent created by the Chinese drywall.
In 2010, southeastern homeowners who had Chinese drywall installed in their homes received a similar federal tax deduction for the repairs. The Chinese drywall, which was used in residential construction from 2001 to 2009, was off-gassing volatile chemicals in moist environments. There were 100,000 homes in 20 states impacted.
Courtney and Larson encouraged homeowners to consult with their tax preparers to determine if they are qualified for the deduction.
If a homeowner has already repaired their foundation then they will be able to submit an amended return to claim the deduction.
Larson and Courtney announce tax relief for homeowners with crumbling foundations.
Posted by CTNewsJunkie.com on Wednesday, November 22, 2017