Deductible Burglary Losses

• In order to claim a tax deduction, the burglar must steal property from you during the burglary. The IRS allows deductions for thefts, which include a range of offenses, such as robberies, blackmails, extortions as well as burglaries. However, it's not a burglary if you lose your property and someone finds it and decides to keep it rather than turn it over to the police. The IRS doesn't allow you to claim a deduction for these types of losses.
  
  

Proving the Burglary

• When you are the victim of a burglary, the last thing on your mind is gathering sufficient proof to support your deduction. Unfortunately, the IRS does require that you possess some evidence that your loss is the result of a burglary. You need not have specific types of proof; however, you must be able to document the time you became aware you were the victim of a burglary, that your property was in fact stolen and not just lost, that you were the actual owner of the property and the probability that you will obtain a reimbursement from an insurance company or from the perpetrator. Common evidence to prove these issues can include a police report of the burglary and receipts for all purchases of the property that is stolen.
  
  

Calculating Your Loss

• There are various steps to calculate the allowable deduction amount. The IRS requires you to use the smaller of the stolen property's cost or its decrease in fair market value after the burglary as your starting point. To illustrate, suppose a burglar steals a 52-inch flat-screen television from your home. If you purchased the television one year ago for $2,000, and at the time of the burglary it's worth $1,200, then you must use $1,200 as your starting point. This is because the television's fair market value at the time of the burglary is $1,200, and immediately after the burglary, it has no value to you since it's no longer in your possession.
  
  

Calculating the Deduction

• Once you ascertain the correct amount of loss, you then reduce the total of all losses resulting from a single burglary by $100. In this case, if your television is the only item stolen, your loss is reduced to $1,100. From this adjusted loss amount, you reduce it again by an amount equal to 10 percent of your adjusted gross income (AGI). For example, if your AGI is $10,000 then this reduction is equal to $1,000, leaving you with only $100 to deduct. The deduction is more substantial when a burglar steals a significant amount of your property rather than just one item.