Like hundreds of others, I lost my house (primary residence) during the Oregon wildfires in September. I had purchased it just two years ago, so still have ~$210,000 on the mortgage.

My homeowners insurance is good and when it processes, I'll have enough to pay off the loan and have a hefty down payment for another house. It'll come through before the end of the year, but I won't be buying a house until next spring. Insurance is also paying for temporary housing and other necessary accommodations.

In addition, during the disaster people have donated thousands of dollars in cash and goods to me and my family... some of it without receipts or precise record-keeping.

So... I've always filed my own taxes, but this may be out of my league. Do I need to track insurance compensation as income, and claim the destroyed dwelling as a loss? Do I need to precisely account for donations? Or do I just need to throw up my hands and get a professional?

My primary question, not having ever gone through something like this before: Does this situation massively complicate federal tax returns, or is it still something that can be handled by a layman with off-the-shelf tax preparation software?

  • 12
    Im just here to say sorry about your house and your situation. That has got to be rough.
    – JonH
    Commented Dec 18, 2020 at 21:41
  • Side note, while you only have 2 years of equity in the house, between the contents and value you should be getting some kind of left over cash, with which you would be wise to use a small amount on a good accountant, even if just for this year. Who knows, there could be other relief programs due to Covid they might be aware of.
    – corsiKa
    Commented Dec 19, 2020 at 5:07

2 Answers 2


Fortunately, in general, none of the things you have received are taxable to you. They fall into two categories:

  1. Insurance claim: this is supposed to replace the value of the property you lost, and should be a wash. In theory you could purchase everything you lost with that money and be back where you started. There should not be a tax liability here.
  2. Friends and family gifts. Gifts are not taxable to the recipient. The gift giver may have to file a form if the total amount of gifts given to you by one person is more than $15K in a single year. (A married couple can gift you $30K, and if you are also married, a married couple can gift you $60K in a single year before having to file the form.)

Disclaimer: this is a simplification. There are some wrinkles depending on if and when you rebuild, and when you sell. Further reading here.

Side note, if you still own the property, make sure you talk to your county about lowering your real estate tax bill for next year, as the property may be worth significantly less without a livable house on it.

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    The last para. is an amazing point, would never have thought of that! Bravo
    – Fattie
    Commented Dec 17, 2020 at 13:49
  • 4
    @Barmar - They contacted all of us as best they could to tell us to submit re-assessment forms into the county tax office asap. (Getting the word out to everybody was a big challenge, since people were scattered all over and mail service broke down. Basically everything ended up going through social media) Commented Dec 17, 2020 at 21:44
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    Municipal governments tend not to be as dysfunctional as federal governments. It's hard to get away with as much failure when your constituents are your neighbors.
    – Barmar
    Commented Dec 17, 2020 at 22:05
  • 2
    @Barmar They also have much fewer balls in the air at any time and much more direct, qualitative knowledge of the situation (i.e., it's easier to do a reasonable job for them).
    – xLeitix
    Commented Dec 18, 2020 at 8:52
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    @Strawberry It means they cancel each other out. You have taxable income, but also deductible expenses that are the same.
    – Barmar
    Commented Dec 18, 2020 at 13:51

I lost my house to a series of pipes that burst during a week I was deployed for work. The house was 'sold' and closing was in 2 weeks. The cost of replacement was more than the house was selling for, not including all of the personal losses.

There was no tax impact. There was reporting requirements for work, however, as I was temporarily gaining and losing $$ from construction pulls. Those may trigger 10K bank reporting.

I will tell you that from my experience I would consider having a lawyer work with the insurance and hiring an outside adjustor to do the loss inventory. There are people on Reddit with great ideas they did (spreadsheet with links to quotes and itemized photos) and if you can do that you'll come out ahead. The reason I mention the lawyer is that you don't wish to 'mis-speak', and the adjustor because the more specific the item is the more quantifiable the loss value/replacement value can be. I didn't do that, and I had about 15k in losses that the insurance wouldn't cover (personal property)

You will also probably have losses that can't be replaced, and those should fall under a tax-loss provision supposing you meet your (I don't know the number, 30%?) minimum loss.

With all of that, the items given to you are tangible and valuable but probably do not exceed the 15k allowance. You should, as if you didn't already have enough, keep track of that (photos are great) and a spreadsheet or two... but I wouldn't be too concerned.

Be safe and get plenty of rest. What you're going through is unfathomable to most people that haven't lived it. The concept of losing everything is one that can be imagined but ... not readily understood in the abstract until...

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