To get all of the details straight from the horse's mouth, see IRS publications 584 and 584-B.

In the wake of Hurricane Harvey, and with everyone watching Hurricane Irma closely, what could happen if something as horrible as Harvey descends on your neighborhood?

Needless to say, use this warning to be sure that your insurance is adequate and you’ve done everything you can to prevent devastation from weather disasters.

The federal income tax code provides for possible tax benefit from what the IRS dubs casualty losses –  but don’t get too excited as the deduction has limitations. A casualty loss is a loss that can come from natural disasters such as hurricanes or tornadoes, but can also come from man-made casualties such as fire, theft or vandalism.

The first and most significant limitation is to determine if you even have a loss. If you have property insurance, you must file a claim. Without the claim, you cannot deduct the loss as casualty or theft. You must reduce the amount of your loss by the amount of insurance money you receive or expect to receive.

The loss would be deductible in the year of the loss or the prior year’s return if the area was declared a federal disaster relief area. In order to claim on a prior return, you would need to amend that return.

The loss amount is also a little complicated. First, you need to determine the adjusted basis of the property.

For something you bought, it is your buying price, plus improvements, less any depreciation taken.

For inherited assets it may be the stepped up basis you received upon inheriting.

And for gifted assets, the adjusted basis is the basis as it was in the hands of the prior owner plus any costs incurred by you to improve the asset.

The second step: determining any decrease in the fair market value of the property, simply the difference in the value of the property just before and just after the loss.

Now you take any insurance or other reimbursements that you may receive and subtract that from the smaller of the adjusted basis or the reduction in fair market value to determine your loss.

This is complicated stuff.

Think of this, if your loss occurs to a rental property that you’ve owned (and depreciated) for a long time, your adjusted basis is probably very low. That may mean you wouldn’t qualify for a deductible casualty loss… and we’re not done yet!

The IRS then requires your loss to be reduced by $100 (very corny) and meet the 10 percent rule. The rule states that you must reduce your total casualty loss by 10% of your adjusted gross income to determine the deductible amount of your casualty loss. By now you’re thinking that this would have to be one very large loss to get any relief on your taxes – and you are right.

To get all of the details straight from the horse’s mouth, see IRS publications 584 and 584-B.