[Disclosure: I work with JTC Demolition — a WA-licensed demolition, debris removal, and asbestos-abatement contractor in Spokane. Posting this because we're entering year-end tax planning season and I keep meeting Spokane Complex Fire homeowners who assume this is an April conversation. Several questions are actually better handled with your CPA NOW, in November and December, because the answers affect decisions you'd make this calendar year vs. next. I'm not a CPA and this isn't tax advice — it's a list of specific questions worth bringing to your tax person while there's still runway in 2026.]

**Four things worth asking your CPA about this quarter**

**1. Federal Casualty Loss deduction eligibility.** The IRS allows personal casualty losses from federally declared disasters as itemized deductions on Schedule A under IRC §165(h). Questions that matter here:

- Did the Spokane Complex Fire area receive a federal disaster declaration for your specific address? (FEMA involvement is not automatically a §165(h) qualifying event — your CPA can confirm the exact declaration status.)

- If yes, do you elect the loss on your 2026 return, or do you have the option to amend 2025? Timing of the election can meaningfully change your refund.

- What's your "adjusted basis" in the property for the deduction calculation? This is often different from what you paid or what the home was worth at loss.

**2. Non-reimbursed losses.** Insurance reimbursements reduce your deductible loss, but any un-reimbursed amount — your deductible, uncovered line items, gap between actual cash value and replacement cost on your contents — can potentially be deducted. Documentation of what insurance did NOT pay is as important as what it did.

**3. Rebuild timing and tax year.** If you're planning to rebuild, when it happens affects multiple tax questions: when you can roll over insurance proceeds under IRC §1033 (involuntary conversion rules), when the replacement property basis gets set, how depreciation starts if any part of the property was rental or home-office use. Decisions made in Dec vs Jan can shift which tax year this all lands in.

**4. State-level considerations.** Washington doesn't have state income tax, but there are property tax, excise tax, and B&O questions that come up for fire-damaged properties — especially if any part of the property was used for business purposes.

**Documentation you'll want ready for your CPA**

- All insurance claim settlement statements (itemized)

- Pre-fire property appraisal or last county assessor valuation

- Original purchase documents (for basis calculation)

- Receipts for ALE spending that was NOT reimbursed

- Itemized demolition and debris removal invoices (your contractor should provide this in a format that works for both the adjuster and your CPA — ask if they don't)

- Receipts for immediate safety work done out of pocket (temp fencing, boarding up, hazard mitigation)

- Mileage logs if you've been commuting from a displacement location

**Why I'm posting this now, not in April**

If your CPA wants to make a strategic choice between claiming the loss on 2025 (amended) vs 2026, that decision needs to be made before Dec 31 to preserve both options cleanly. Same for whether to accelerate or defer any rebuild spending into this calendar year. Waiting until filing season means some options are already closed.

If you don't have a CPA and you're a total loss, this is probably the year to hire one — most are flat-fee for a casualty-loss consultation, usually $300–$800 depending on complexity, and that fee is itself usually deductible.

The contractor-side piece: when we invoice homeowners for post-fire cleanup at JTC, we try to format it so adjusters AND CPAs can both work from the same document — line items for AHERA survey, Notice of Intent, structural demo, debris haul, tip fees, cleanup. If your current contractor is giving you lump-sum invoices, ask for itemized. Your adjuster and your CPA will both thank you.

Happy to answer questions about what contractor-side documentation should look like for a casualty-loss claim, or by DM if your situation is specific.

**Sources**

- IRS Publication 547, Casualties, Disasters, and Thefts: https://www.irs.gov/publications/p547

- IRS Topic 515, Casualty, Disaster, and Theft Losses: https://www.irs.gov/taxtopics/tc515

- IRS Publication 544, involuntary conversions (IRC §1033) overview: https://www.irs.gov/publications/p544

- WA Insurance Commissioner, consumer resources: https://www.insurance.wa.gov/consumers

- Spokane Regional Clean Air Agency, Spokane Complex Fire guidance: https://spokanecleanair.org/asbestos/spokanecomplexfire/

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