The IRS is a much despised agency, but it actually does some good things from time to time. The announcement the IRS will provide relief to taxpayers with corrosive drywall problems is one of those times. 

More than a few homeowners experienced a big problem during this decade. There seemed to be a problem with their drywall. Specifically, it was corroding and turning black or dissolving copper wire embedded in the walls. Particularly nasty was the fact it was giving off sulfur gas. An investigation by the Consumer Product Safety Commission revealed there was a legitimate problem. 

So, what could be said for the situation? Well, the determination by the government that there was a real problem was nice and all, but it hardly paid for fixing the problem. Some were able to get their insurance to pay for fixes, but most were not. Some sued the developers and some the manufacturers. All of this constituted an expensive and lengthy process to say the least. 

The IRS is stepping in to lend a helping hand. In a rather shocking move, the Agency is going to let homeowners claim the repairs as casualty losses. This effectively means that the homeowners will be able to claim a tax deduction for the cost of the fix of the walls, wiring and appliances. To say the least, this is a revolutionary approach by the IRS and one that involves a real stretching of the tax code. The specific instructions for claiming the loss have not been released as of yet, but make sure to talk to your tax professional or visit the IRS site to see things develop.

What if you already dealt with the problem in past years? Can you still take advantage of this gift from the IRS? Maybe. You have the right to amend any tax return filed the past three years. If your repairs were done in 2007, 2008 or 2009, you could pull those returns, amend them and refile to get a hefty tax refund thanks to the new deductions. If you are going to take this approach, it would be wise to use a CPA. 

The IRS doesn’t exactly have a great reputation with taxpayers. That is understandable, but the Agency should also get credit when it is due. This is one such situation.