What Is a 165 Loss?
A "165 loss" refers to Section 165 of the Internal Revenue Code, which governs the federal income-tax deduction for losses — including business losses, investment losses, and personal casualty and theft losses. It defines when and how a taxpayer can deduct a loss that is sustained during the year and not compensated by insurance or otherwise.
What § 165 Covers
- Business and investment losses — generally deductible
- Casualty and theft losses — losses from sudden events like fire, storm, or theft
- The deductible amount is reduced by any insurance or other reimbursement received
Casualty Losses and Florida Storms
For individuals, the deduction for personal casualty losses is currently limited (for tax years 2018–2025) to losses attributable to a federally declared disaster. That limit is highly relevant in Florida: damage from a hurricane that triggers a federal disaster declaration may support a casualty-loss deduction, while everyday personal losses generally do not. Because the rules are technical — and depend on the property's basis, insurance recovery, and the disaster declaration — affected owners should work with a tax professional. This is a federal matter; Florida has no state income tax.
Related Terms
- Title 26 U.S.C. — The Internal Revenue Code, home of § 165
- Replacement Cost — Insurance recovery that reduces the loss
- Ordinance or Law Coverage — Related storm-rebuilding coverage
Barnes Walker
Barnes Walker's attorneys handle Florida property and storm-loss matters with attention to their federal tax consequences. Request a legal inquiry for assistance.
Federal Law Reference
26 U.S.C. § 165
Governs the deduction of losses; for 2018–2025, an individual’s personal casualty loss is generally deductible only if attributable to a federally declared disaster, reduced by insurance recovery.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC