18.15 Repairs May Be a “Measure of Loss”
The cost of repairs may be treated as evidence of the loss of value (Step 1 (18.13)), if the amount is not excessive and the repairs do nothing more than restore the property to its condition before the casualty. An estimate for repairs will not suffice; only actual repairs may be used as a measure of loss. However, where you measure your loss by comparing appraisals of value for before and after the casualty, repairs may be considered in arriving at a post-casualty value even though no actual repairs are made.
Deduction not limited to repairs.
A casualty loss deduction is not limited to repair expenses where the decline in market value is greater, according to a federal appeals court; see the following Example.
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