Post-Ian Recovery – Disaster Relief Funds, Tax Deductions, and The Future of Homes and Vehicles Damaged in The Storm
As Floridians rebuild after being hit by one of the most powerful hurricanes ever to strike the continental United States – Ian – property loss, taxes, insurance, and relief funds are all significant sources of concern for victims’ well-being.
The crucial questions are whether or not those impacted will be able to recover from their misfortunes, how long the recovery process will take, and what measures are in place to aid the victims’ recovery.
With the help of the Federal Emergency Management Agency (FEMA), Florida is exerting every effort to assist in the victims’ rehabilitation. According to Florida disaster.org news media, there is more than $50 million in the Florida Disaster Fund to help communities cope with and recover from disasters.
Survivors can apply for FEMA assistance and continuously update their applications by visiting DisasterAssistance.gov, calling (800) 621-3362, using the FEMA app, or going to one of the more than 20 open Disaster Recovery Centers (DRCs). Until Saturday, November 12, state agencies will continue to offer in-person services at DRCs in Charlotte, Collier, Lee, and Sarasota counties.
In addition, if a survivor’s home requires repairs not covered by their insurance policy, the Federal Emergency Management Agency may provide up to $37,900 in assistance. FEMA offers service to individuals up to $37,900 for various reasons. After a federally declared disaster, these funds can cover furniture, child care, funeral, and medical costs. All disaster-related expenses not covered by insurance or savings are eligible for reimbursement.
Tax Reliefs for Victims
The extended deadline for filing individual and business federal tax returns for the tax year 2021 for victims of Hurricane Ian is February 15, 2023. Everyone whose permanent address on file with the IRS is in the affected area automatically qualifies for this extension as well.
If an individual tax return’s due date is September 23, 2022, or later, and they receive a late filing or payment penalty notice from the IRS, such an individual can waive the penalty by calling the number listed on the notice.
Similarly, the IRS will work with anyone to ensure they’re not penalized if they live outside of the disaster area but have records necessary to meet a deadline located inside the area.
Casualty Loss Tax Deductions
The Internal Revenue Service (IRS) allows a tax deduction for a loss sustained during the tax year of the federally declared disaster, as required by section 165 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act.
These tax breaks apply to casualty losses sustained in federally declared disaster areas during the tax years 2018 through 2025. Consequently, one cannot claim a tax write-off for a loss before 2018. In light of this, in 2021 and 2022, victims who have incurred property damage not covered by insurance can deduct these amounts from their taxable income.
To determine how much of your loss is tax deductible if you are insured, you must first subtract the amount reimbursed or the salvage value determined by your insurance company. Deductions are available if your net casualty loss is more than 10% of your adjusted gross income.
According to the Internal Revenue Service (IRS), after deducting salvage values and other reimbursements, you would “reduce each casualty by $500. An individual’s losses can be deducted as an itemized expense on Schedule A of Form 1040.
Tight Car Inventory
When Ian made landfall, numerous automobiles were flooded, destroyed, or carried away. Estimates show that Hurricane Ian could be the second largest automobile loss event in U.S. history after Hurricane Harvey in 2017, which damaged over 500,000 vehicles. Carfax reports that as many as 358,000 vehicles in the affected areas from Florida to the Carolinas were damaged by floodwaters during Hurricane Ian. This is in addition to the currently over 400,000 cars registered with it that are water-damaged.
More worrisome is that electric vehicles in Florida have begun catching fire in the aftermath of Hurricane Ian, prompting an urgent warning about acquiring one. Several investigations have demonstrated that the interaction of salt water and EV batteries can cause fires.
There is a growing need for automobiles, and Florida car dealerships are attempting to accommodate that desire. Some automakers have offered to supply more new automobiles than usual to affected areas. In addition to delaying the first car payment, many dealerships offer discounts of $1,000 or more to customers replacing vehicles destroyed by the hurricane.
As of now, Cox Automotive predicted in an October news release that new vehicle inventories would remain constrained, with approximately 80% of Ian replacement vehicles being used, but without a discernible impact on national used-vehicle retail sales. According to Jonathan Smoke Cox, Chief Economist for the Automotive Industry, Florida will experience above-average demand throughout October and November.
Insurance companies should ideally declare a flooded vehicle a total loss and sell it off for parts or scrap. However, it is not uncommon to find these vehicles in the market. CARFAX says that 50 percent of flood-damaged cars end up back on the market as used cars, with Texas, Florida, Kentucky, Pennsylvania, and New Jersey taking the cake for the states with the most flooded cars. While it’s a good idea to check the car’s history before buying it, consumers who need more confidence in their inspections should take the vehicle to a mechanic for a second opinion.
Recovering From Home Loss
Most standard homeowner’s insurance policies do not cover damage from natural disasters such as floods and earthquakes. Numerous victims of Hurricane Ian discovered that their insurance was insufficient.
CoreLogic, a leading research firm that monitors and estimates the cost of damages from natural disasters, estimates that uninsured flood losses range between $10 billion and $17 billion, close to the insured flood losses range of $8 to $18 billion.
Only 29 percent of the 1,8 million households in the nine disaster-declared counties have federal flood insurance, according to an analysis by POLITICO’s E&E News.
Ironically, many of the most vulnerable storm victims are also the least able to afford the high reconstruction costs. To prepare for the next storm, they must rebuild stronger homes, which isn’t cheap. Home Advisor says the average price of a new home in Florida is roughly $20,000 higher than the national average.
Jennifer Fagenbaum, executive director of Family Promise of South Sarasota County, tells Axios, “I see a reduction in our affordable housing going forward and a delay in plans for it.” She predicts, “There will be a large number of renters and homeowners without a home for quite some time.”
To enable victims’ insurance plan benefits to kick in, The Florida Housing Finance Corporation has allocated five million dollars to local housing partners to assist Floridians in paying toward their insured loss. Individuals and families in these six counties – Charlotte, Collier, DeSoto, Hardee, Lee, and Sarasota-are eligible to receive these funds if they apply.
“When we take into account how the cost of construction materials and labor has increased after the hurricane,” says Jennifer Spinelli, founder, and CEO of Niche Home Buyer, “it’s difficult to estimate how much of an impact relief funding would have on rebuilding efforts. The aid might not be sufficient.”
On the other hand, she acknowledges that every little bit helps. Relief funding supplied by organizations or governments can at least offer some financial aid to those who need it most by covering some costs involved with home reconstruction, like getting a new roof.
This article was produced by and syndicated by Wealth of Geeks.
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