# How to Calculate Fair Market Value of Property After a Casualty Loss

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The IRS generally prohibits taxpayers from claiming a deduction for losses they incur on personal property. However, if your loss is the direct result of a casualty event, such as severe weather or a sudden and unavoidable accident, part of your loss is deductible. Calculating your deductible loss requires assessing the Fair Market Value, or FMV, of your property immediately before and after the casualty. In many cases, the decrease in FMV determines how much you can deduct.

#### Tips

• In order to determine the fair market value of a property after a casualty loss, you will need to document the 'post-event' value of your property (the fair market value of your property minus the cost of any repairs that were needed) and the current adjusted basis. The lower of these tools values can be used as part of a deduction on your tax return.

## Determine Pre-Event Value

Calculate the property’s FMV immediately before the casualty event. The FMV of your property is always equal to its market price, which is the amount a buyer is willing to pay for the property in its current condition. Therefore, you must assess the property’s FMV using appraisals or the sales price of similar property in comparable condition. For example, if a hurricane causes damage to your car, a reasonable FMV is the price that a reputable used-car guide values it at given its age, mileage and running condition.

## Calculate Post-Event Value

Calculate FMV immediately after casualty event. In most cases, the FMV of your property after the casualty event is equal to the FMV immediately before the event, less the cost of the repairs necessary to restore it to its original condition. Therefore, if the used-car guide estimates your car’s value at \$10,000 and the storm requires you to replace a broken windshield for \$1,500; the car’s FMV after the casualty event is \$8,500. However, if the car is completely destroyed by the storm, your FMV is zero.