Press Releases

Warner, Webb, Nye Urge IRS to Approve Tax Deduction for Drywall Homeowners

~ Casualty loss deduction would be significant for 80+ Virginia homeowners ~

Nov 25 2009

WASHINGTON - U.S. Senators Mark Warner, Jim Webb and Rep. Glenn Nye have joined members of Congress from two other states in urging the Internal Revenue Service (IRS) to approve a tax deduction known as a "casualty loss" for homeowners in Virginia, Florida and Virginia who are dealing with the structural defects and health problems associated with contaminated drywall. Casualty loss deductions allow property owners to deduct from their taxes a portion of the decrease in value of the property following sudden or unexpected damage. The joint letter to the IRS is below.

The request for the tax break, which could be significant for individual homeowners, came one day after federal investigators from the U.S. Consumer Product Safety Commission (CPSC) issued a report saying there is a "strong association" between the contaminated drywall and the health issues and unsafe corrosion of electrical wiring and appliances commonly reported by thousands of homeowners, including more than 80 households across southeastern Virginia. Previously, the IRS has said it would consider allowing the tax deduction for homes affected by tainted drywall depending on the outcome of the federal investigation.

"Many of these families have been forced to make expensive alternate housing arrangements while they wait for the federal government to get to the bottom of the health and safety concerns that have really made many of these homes uninhabitable," Senator Warner said. "The Virginia congressional delegation has been working to try to provide these homeowners with some flexibility and forbearance from their mortgage lenders, and this additional IRS tax break could provide welcome financial relief as well."

“Affected homeowners in Virginia are already struggling to deal with the health and property issues related to the defective drywall,” said Senator Webb. "An IRS tax break to these families and business owners will provide some financial relief as we continue to seek additional federal and international remedies. I have also asked President Obama to look into the liability of Chinese companies, and whether those companies or the Chinese government will be held accountable for financial or health-related damages."

“While this is clearly a step forward, it is only helpful if this information is used to bring relief to these families," said Congressman Nye. "Toxic drywall clearly meets the standard set by the IRS for granting a tax deduction. I urge the IRS to act quickly to implement this tax deduction, and we need to start testing individual homes as soon as possible so families can begin to get some financial relief."

To date, CPSC has received more than 2,100 complaints from 32 states from homeowners reporting a variety of similar health and safety issues believed linked to the contaminated drywall.

Earlier this year, Senators Warner and Webb and Congressman Nye contacted the U.S. Department of Housing and Urban Development and the Department of Treasury to gauge what kinds of mortgage assistance might be available to homeowners impacted by contaminated drywall. They teamed with Senators from Florida and Louisiana to seek similar guidance from the IRS, the Small Business Administration and the Federal Emergency Management Administration. This group, joined in a bipartisan effort by Senators David Vitter (LA) and Greg LeMieux (FL), also won unanimous consent from the Senate earlier this month on a Resolution calling on U.S. banks and mortgage lenders to work cooperatively to assist these homeowners.

The CPSC is leading a group including the U.S. Environmental Protection Agency (EPA), U.S. Department of Housing and Urban Development (HUD), Centers for Disease Control and Prevention (CDC), Agency for Toxic Substance and Disease Registry (ATSDR), and several state departments of health on this issue.

Homeowners who believe they may have problem drywall should immediately report to CPSC by calling 800-638-2772. Hearing- or speech challenged individuals may access the phone number through TTY by calling the toll-free Federal Relay Service at 800-877-8339.

Warner/Webb/Nye Letter to IRS on Chinese Drywall Victims