To figure Fair Market Value of personal belongings at time of loss, you have several options.

You can use the Personal Belongings Replacement Cost Safe Harbor--reduce by 10% for each year owned:

• the cost at purchase of original item
• OR if original cost not know, the cost or similar replacment item (not an upgraded version) 

Example: You bought a couch in 2018 for $2,000

• To replace the couch with something similar now cost $2,800.  You cannot claim the $2,800. The value of the couch that was lost was not $2,800. Items lose their value over time due to wear and tear.
• You owned the original couch for 2 years, so we have to reduce the value of the couch by 10% for every year. This is the Personal Belonging Safe Harbor –there are 2 easy way to calculate.
  • Option 1:   2 step method—multiply & subtract: 10% x 2 years = 20% or 0.20;  so we subtract 20% of the value (2,000 x .20 = 400; 2,000-400=$1,600 for FMV)
  • Or Easier way (multiply by value kept)—if we lost 20%, that means we still have 80% of value…. So just multiply the original cost by the value it kept (2,000 x .80 =$1,600 for FMV)

DO WHAT WORKS FOR YOU!

Remember--you need to add "Safe Harbor" to the desription of items so the IRS won't challenge it.

Or.. Use a depreciation Calcualtor to find the depreciation value for each specific type of item. It will show percentage rates by type of item that you can use with original cost and replacemet value.

If you have replacement value--it can calculate the FMV for each items as well.

claimspages.com/tools/depreciation/

​Thre is even a PDF with a list of percentages -- click image to open

Or.. If loss of personal belongings is under $5,000--You can also use what is called De minimis Method--as long as the FMV of losses is under $5,000; just come up with a good faith estimate. Make sure to record How you came up with the value and keep for your records--describe affected personal belongings and how you came up with the value.

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You can use worksheets to tally/record your losses

For Simple Casualty Loss Worksheet--one page click here  you will need to make a copy before using it--might have to have Google Account



  Click For Detailed multi-page  Casualty Loss Spreadsheet you will need to make a copy before using it