Disaster Loss

AAA

DEFINITION of 'Disaster Loss'

A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President. Disaster losses can arise from such phenomena as floods, forest fires and earthquakes.

INVESTOPEDIA EXPLAINS 'Disaster Loss'

Disaster losses may be deducted either in the year that the loss is incurred or the previous year, if it is more beneficial to the taxpayer and pending on the type of disaster. Homeowners who must relocate due to damage in a disaster area can often claim a loss even though the damage sustained does not meet the sudden event test.

RELATED TERMS
  1. Property Insurance

    A policy that provides financial reimbursement to the owner or ...
  2. Business Continuity Planning - ...

    The creation of a strategy through the recognition of threats ...
  3. Disaster Relief Act

    A United States federal law passed in 1974 that laid down the ...
  4. Consequential Loss

    The amount of loss incurred as a result of being unable to use ...
  5. Catastrophe Insurance

    Insurance to protect businesses and residences against natural ...
  6. Loss Settlement Amount

    A term used to denote the amount of a homeowner's insurance settlement. ...
RELATED FAQS
  1. Suppose my garage collapsed onto my car. Are damages covered by my home insurance ...

    Generally, damage to an automobile will be covered by comprehensive car insurance, which is in addition to collision coverage ... Read Full Answer >>
  2. What is a "force majeure"?

    A force majeure is derived from the French term meaning "greater force" and refers to any natural and unavoidable catastrophe. ... Read Full Answer >>
Related Articles
  1. Home & Auto

    Protecting Your Financial Documents From Disaster

    Organizing and updating your records regularly can save you a lot of grief in a time of crisis.
  2. Home & Auto

    Prepare Your Finances To Handle Natural Disasters

    Use these easy tips to protect your financial interests from natural disasters.
  3. Credit & Loans

    Student Loan Deferment: Live To Pay Another Day

    Extending your principal repayment date can increase your chances of fighting off default.
  4. Options & Futures

    Insurance 101 For Renters

    If it's time for you to leave the nest, find out how to protect your new home from disaster.
  5. Taxes

    Deducting Disaster: Casualty And Theft Losses

    If you've been a victim, your losses may be deductible. Find out how.
  6. Home & Auto

    5 Investment Risks Created By Global Warming

    Climate-change deniers and believers alike would be wise to prepare for the worst.
  7. Personal Finance

    Eight Financial Safeguards If Disaster Strikes

    In an emergency like a fire, hurricane, flood, tornado or earthquake, you may not be able to protect your home. But you can take steps to avoid financial disaster.
  8. Taxes

    Cut Taxes By Reporting Property Damage

    Know the options you have for your insured property if and when a disaster strikes.
  9. Investing Basics

    Three Investing Lessons from the Napa Earthquake

    Here are three investing lessons from last week’s earthquake.
  10. Personal Finance

    Natural Disasters: Issues Relating To Leaves Of Absence

    Small businesses are more likely to fail in the aftermath of devastation. How can you as an employee handle issues after a disaster?

You May Also Like

Hot Definitions
  1. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  2. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  3. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  4. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  5. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  6. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
Trading Center