Social Security Administration: “Loss of Income Producing Property” and “Life Changing Events” (Such as Sandy)

It has come to our attention that the “Loss of Income Producing Property” (a “Life Changing Event” as termed by the Social Security Administration) may be used to offset some of your income tax.  If you own a secondary home that was damaged or destroyed by Sandy, and it also produced rental income, this provision may be of benefit to you.  “Life Changing Events” specifically include natural disasters such as Sandy – as stated by the SSA –

“The loss of income-producing property must not be caused by the beneficiary’s direction. The loss must be caused by circumstances beyond the beneficiary’s control. A loss due to donation, gift, sale or transfer of income-producing property is not considered a loss beyond the beneficiary’s control and does not qualify for a new initial determination using a more recent tax year. Ordinary risk of loss taken at the time of investment in income-producing property is considered at the beneficiary’s direction. Examples of circumstances beyond a beneficiary’s control are losses caused by:

You can read more about the law here.  If you think that this situation may apply to you, you should contact your accountant or tax advisor for advice.

Suzie and Ed

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