People who reside in or had businesses in the areas that burned in the wildfires that started in California on November 8, 2018 could qualify for federal tax relief.
The Camp and Woolsey Fires destroyed thousands of homes in Butte, Los Angeles and Ventura counties. Since the President declared the fires to be major disasters residents with losses in those locations may be able to take advantage of slightly extended deadlines for filing federal tax returns.
In addition, taxpayers in the federally declared disaster areas have the option of claiming disaster-related casualty losses on their federal income tax return for either the year in which the event occurred, or the prior year. See IRS Publication 547 for details. IRS Publication 976 has instructions for tax relief for the California fires of 2017.
Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. IRS Form 4684, Casualties and Thefts, has more details.
General information about the program can be found at the IRS website.
Thanks and a tip of the hat go out to Jim. Typos or errors, report them HERE.
There is a much more serious tax problem for residents of Paradise, huge potential increases in property taxes if they rebuild. I built an fiscal impact model of Paradise as part of the Oroville Dam FERC Re-Licensing. I worked for the State of California as a consulting economist. The property taxes in Paradise were so complicated that I had to do a lot of field work with the assessors office to figure out the tax base. Proposition 1 limits property tax increases to one percent per year from the base year in which the property is purchased. The consequence is that two identical homes in the same subdivision can have radically different property taxes and market valuations (if they have different base years of purchase). Residents of Paradise who rebuild will face several hundred or even thousand percent increases in property taxes. Their new base year for tax assessment will be 2019 (current real property value).