Those who have gone through a loss — whether it’s a fire, a bad car accident or a major theft — know that getting your life back on track can feel overwhelming.
The IRS calls the damage, destruction or loss of property due to sudden, unexpected or unusual events a “casualty loss,” but that term does not fully describe the emotional toll and loss of valuable time that goes along with the physical loss.
From dealing with the insurance companies, never-ending decisions about what to do next and unexpected expenses, the road to recovery can be long and expensive.
If you are recovering from a casualty, there are professionals who can cut through the red tape, save you time and stress, and assist with getting you back on your feet or moved into a comfortable and safe home. Here are some you may not be aware of.
Deduct your losses
The IRS rules for claiming casualty losses are notoriously complex, making it necessary to work with a tax professional who has experience in this area.
Victims of the California wildfires in January 2025 can take advantage of the best possible tax treatment available under the “qualified disaster loss” provisions. If you suffered a qualified disaster loss, you are eligible to claim a casualty loss deduction, elect to claim the loss in the preceding tax year, and deduct the loss without itemizing other deductions.
There are many types of non-qualified casualty losses; wild taxpayer claims have included damage from sonic booms, drunk wildlife, and every kind of pet mishap. Some may find that their losses aren’t deductible unless they meet specific rules.
For instance, the IRS states that the deterioration and damage to a water heater that bursts is not a casualty loss because it was due to deterioration over time. However, the rust and water damage to rugs and drapes caused by the bursting of a water heater qualifies as a casualty.
But even if you determine that your disaster is a casualty loss under those rules, it still might not be deductible because of additional limitations!
Given how unpredictable the IRS rules can be and how they change from year to year, consulting a tax professional is the best way to maximize relief while avoiding errors that could lead to additional taxes and penalties.
Obtain a larger settlement
Many people don’t realize that they have the option to hire an expert and advocate called a “public adjuster” when dealing with an insurance claim.
Unlike the adjuster sent by your insurance company, which works for the insurer, a public adjuster is an independent professional who represents you, the policyholder, to help ensure you receive the maximum payout for your loss.
A public adjuster will present your claim to the insurance company, negotiate on your behalf, and work to settle your claim. This can be especially valuable in situations where your insurance company’s estimate seems low or if your claim is particularly complex.
If you decide to hire a public adjuster, there are some critical considerations. Many experts suggest you contact your insurance company’s adjuster first to try on your own to obtain a written estimate of the damages. If you disagree with their valuation, a public adjuster can provide a second estimate and advocate for a higher payout.
Public adjusters must be licensed and bonded, so be sure to verify their status through the California Department of Insurance before hiring one. Additionally, always request a written agreement outlining their fees and terms.
In California, public adjusters typically charge between 5% and 20% of the final insurance settlement, but the exact amount varies.
Make sure new home is safe
After rehabilitating a home following a fire, flood, or other disaster, many homeowners focus on visible repairs, like replacing drywall, flooring, and fixtures, but they do not look into the hidden environmental hazards that can linger long after construction crews have finished their work.
A fire can leave behind toxic soot inside walls, air ducts, and insulation. Burned and old building materials may have released hazardous substances into the air, which then settle into dust and soil, creating an ongoing exposure risk, especially in your patio or vegetable garden.
Flooding can introduce mold, bacteria, and sewage-related contamination that thrives in hidden spaces. Many new building materials and installations, including wet lumber, drywall, and ill-fitting plumbing, can cause mold in your new home.
You don’t want to move into your new or newly rebuilt house only to be poisoned and have to move out again.
While a standard home inspection checks for structural soundness and the functionality of major systems, it often does not include environmental testing for hazards like mold, asbestos, and lead —all of which can pose serious long-term health risks.
Environmental home inspection fees can vary. Most companies I contacted charged from $500-$1,200 for a basic inspection.
Save taxes
If you are rebuilding or purchasing a new business location or rental property after a disaster, you may want to consider hiring a cost segregation specialist to maximize the tax benefits of your reconstruction or purchase.
A cost segregation study allows property owners to accelerate depreciation on specific components of their building, increasing tax savings in the early years of ownership.
Instead of depreciating the entire building over 27.5 years (for residential rental property) or 39 years (for commercial property), a cost segregation study separates certain assets — such as flooring, electrical systems and land improvements — that could be depreciated over five, seven or 15 years, allowing for much larger deductions in the short term.
In other words, they can help speed up the depreciation, allowing for a bigger write-off in the short term.
Fees for cost segregation studies can range from $5,000-$15,000. Request that the specialist provide an estimate before starting work so you can do a cost-benefit analysis to determine if it is worth it.
Ask for help
The professionals who work in disaster recovery bring more than just technical expertise; they bring experience, perspective, and an understanding that only comes from working with these situations every day. Some are even survivors themselves.
I have also found that one good professional leads to another, creating a network of people who not only know what to do but genuinely want to help. That kind of support is invaluable, especially in times when everything feels difficult. Remember, you don’t have to go through this alone.
Michelle C. Herting is a CPA, accredited in business valuations, and an accredited estate planner specializing in succession planning and estate, gift, and trust taxes.