How do I recreate my records after a disaster?
Wildfire season has only begun, and it has already devastated many states. While most of our owners are fortunate and never have a major problem with their properties, this is not always the case. At our Phoenix property management company, we have seen several homes burn down from disasters like wildfires, faulty wiring and neglected maintenance. Afterward, our property owners often feel uncertain about what to do. Should you file an insurance claim? Is there a tax deduction for fire damage? If you are uncertain about what to do after a disaster, our property management team can help.
What Should You Do After a Major Disaster?
As a property owner, there are a few things you need to do after your rental becomes damaged. Floods, wildfires and other disasters can lead to thousands of dollars in repair costs. By taking a few simple steps, you can avoid major issues and keep your repair costs as low as possible.
1. Take Photographs
Once it is safe to return to the property, you need to take photos and videos of the site. This needs to be done as soon as possible because you have to establish the extent of the property damage. At the very least, you need to track which items were destroyed or lost. You can even draw each room and the items that were damaged if it is impossible to take photos.
2. Call the Bank, Escrow or Title Company
Next, you should call the escrow company, bank or title company that managed the purchase of your property. You need to request multiple copies of your purchase agreements. If the title company is not available, your real estate broker should have the correct records on file.
3. Get a Tax Deduction
In the Tax Cuts and Jobs Act (TCJA), the government cracked down on certain casualty loss deductions. Fortunately, you might be able to write off your losses if they occurred in federal disaster areas. Like most tax deductions, there are limitations to what you can claim.
Your records are important because they help you document whether your loss is deductible or not. You also need to keep accurate records for insurance reimbursements and federal assistance. First, the Internal Revenue Service (IRS) offers a free tool for getting a return transcript. If you do not want to go online, you can always call the IRS at 1-800-908-9946.
For real estate losses, you can use your current property tax statement to create your land-versus-building ratio. You can call your county assessor if you do not have a current statement on hand. To create a fair market value for your home, you can look at comparable sales in the surrounding neighborhood. You can also get an appraisal or go to a real estate site to get a home valuation. Your real estate broker or mortgage company may be able to give you a home valuation as well.
Then, you should take a look at your insurance policy. Your policy should show the value of your building and how much you will get to replace it. If you have made home improvements, you should reach out to your contractors to see if they still have receipts or records from doing the work.
It can be challenging to figure out the fair market value of different types of personal property. You can try looking through your mobile phone for photos of the items. If you bought the item online, you may be able to find a receipt or the item's value by returning to the company's website.
Fortunately, it should be fairly easy to discover the cost of an item if you purchased it with a debit card or credit card. All you have to do is search through your canceled checks, bank statements and receipts to find evidence of the item's valuation. You can also call your credit card company or bank to get copies of your past statements.
In general, a casualty loss can only be deducted in the year that it happened. If your property was harmed in an event that was declared a disaster by the federal government, you can choose to deduct your losses in the year it happened or in the preceding year. For example, you can file an amended 2019 return for your losses in 2020 instead of waiting until you are able to file a 2020 return.
Prepare for the Worst
At our Phoenix property management company, we hope that our owners will never have to deal with a major disaster. Since it is impossible to know when a disaster will happen, we recommend that all of our owners get prepared in advance. To start with, property owners should keep a careful inventory of their properties and all of the items at each property. These records should be stored in a bag or storage cabinet that is waterproof and fireproof.
You can make your records even safer by scanning them and storing them on a CD. Some property owners use cloud storage for an added layer of protection. Because cloud storage can be accessed from any location that has internet access, your documents are protected from any disaster.
Save Yourself the Hassle
Right now, watching the news can be incredibly stressful. While many of the worst fires are happening in California and Oregon, there are still fires and other disasters occurring in Arizona. As a property owner, you already have enough things to worry about. You do not want to worry about which steps you should take after a disaster occurs.
When you work with a property management company, you can relax and let someone else deal with the stress. At Service Star Realty, we have years of experience handling all kinds of disasters. From talking to insurance companies to hiring restoration specialists, we deal with the immediate and long-term effects of a disaster.
Through our team, you can make sure your property is prepared. If a disaster hits, we will immediately jump into action. With the help of the right property management team, you can spend less time worrying and more time enjoying yourself.
Additional blogs you may wish to explore:
Do Phoenix Property Owners Need to Renovate to Successfully Rent Their Homes?
Should Phoenix Landlords Hire Licensed Home Contractors for Rental Property Repairs?
Having the Proper Insurance for Property Investors
