Natural Disaster

• The IRS allows homeowners to deduct casualty costs incurred to remove mold from their property if they did not already have mold in their home and experienced a sudden and unexpected event that causes the mold to develop, such as a flood or a hurricane. Homeowners must take the full cost of repairing their primary residence through mold remediation and then subtract $100 from the total invoice for remediation, including the cost of materials and labor. They will then reduce this amount by 10 percent of their adjusted gross income to determine their allowable deduction.
  
  

Businesses

• Taxpayers can deduct all mold remediation expenses related to repairing a property to undamaged condition as an ordinary business expense if they use the property to carry out a trade, such as in the case of a rental property or a retail store, per IRS Ruling 200607003. For a business owner to qualify, the mold problem must have developed after the business owner either purchased or started to lease the property. Remediation expenses for pre-existing mold conditions that a businessperson did not notice when he first leased or purchased are not tax deductible.
  
  

Time Frame

• Homeowners who experience causality and businesses usually claim their expenses for mold remediation in the years in which they paid for repair, except that homeowners in a federally declared disaster area can amend an earlier year's return to apply a deduction to it, according to the IRS. Taxpayers should wait to see if they receive compensation from their insurer before claiming a deduction, because they will have to reduce the allowed deduction for repairs by the amount that their insurer compensates them.
  
  

Filing

• Homeowners with casualty losses and small businesses must complete IRS Form 4684 to report their losses and claim their deduction. Individuals will fill out Section A, while businesses will complete Section B. After finishing the form, individuals, sole proprietors, S-corporations and partnerships can carry over their allowed deduction onto line 28 of Form 1040, Schedule A. Corporations will report their mold remediation costs on line 14 of Form 1120.