Resources for Homeowners

Federal Tax Relief

I have worked for several years to secure federal tax relief from the IRS for homeowners with crumbling foundations.

If you are a homeowner affected by crumbling foundations, and who has made repairs to your home foundation, you may be eligible for a casualty loss deduction from the IRS. The IRS has published two “Revenue Procedures” on taking a crumbling foundations casualty loss deduction.

If you have made a repair to your home’s foundation and are eligible for the casualty loss deduction, you may also be eligible to “carry back” or “carry forward” that loss. Specifically, you may be eligible for federal tax relief for up to twenty years, depending on when your repair was made and the amount spent on your repairs. To this end, with my urging, the IRS issued a clarification on taking a “Net Operating Loss”, spreading your casualty loss over many years – a win for average homeowners. Additionally, after contacting the IRS about this issue, the IRS confirmed that homeowners may take the casualty loss deduction to cover repairs that the Connecticut Foundations Solutions Indemnity Company, Inc. is not permitted to cover.

The first Revenue Procedure published by the IRS is available at: https://www.irs.gov/pub/irs-drop/rp-17-60.pdf.

The second Revenue Procedure is available at: https://www.irs.gov/pub/irs-drop/rp-18-14.pdf

To read the “Net Operating Loss” clarification from the IRS, click here: https://courtney.house.gov/sites/courtney.house.gov/files/IRS%20Letter.pdf

To view the IRS webinar from several years ago on the casualty loss deduction and net operating losses due to crumbling foundations, click here:

https://www.irsvideos.gov/Business/DisasterInformation/DeterioratingResidentialConcreteFoundations

To view the IRS PowerPoint presentation from the February 10th 2020 webinar, click here.

https://courtney.house.gov/sites/courtney.house.gov/files/CF%20Power%20Point%20_0.pdf

I would highly recommend that you consult with a tax preparer to determine if you are eligible for the deduction or the net operating loss.

The Captive Insurance Company

As a result of funding from the State, state legislators, municipal officials, and private sector leaders established the Connecticut Foundations Solutions Indemnity Company (CFSIC), or a "captive" insurance company. My staff and I continue to be in close communication with CFSIC leadership. To visit the Connecticut Foundations Solutions Indemnity Company’s website and apply for relief through their portal, click here: https://crumblingfoundations.org/.

It is important to note that CFSIC may not cover all expenses necessary to fix a foundation, and is capped at providing $175,000 per home. For example, CFSIC may not cover repairs or removal of landscaping features, such as gardens or walkways. To this end, I wrote to the IRS and received a response that homeowners with crumbling foundations may be able to apply for federal casualty loss deduction to certain repairs linked to fixing their crumbling foundation that are not covered by CFSIC.

For more information on legislation on the State level for crumbling foundations, please visit the Connecticut Department of Housing's crumbling foundations page at https://www.ct.gov/doh/cwp/view.asp?a=4513&Q=599270&PM=1.

Foundation Testing

The Capitol Region Council of Governments (CRCOG) and the State of Connecticut continue operate a foundation testing reimbursement program, allowing eligible homeowners to receive a 100% reimbursement, up to $400, from a licensed engineer for visual testing. To receive this funding, the home must have been built after 1983 and must have been built within a 20-mile radius of the location of J.J. Mottes Concrete Company in Stafford Springs. In addition, homeowners are eligible for a 50% testing reimbursement, up to $2,000, for core sample testing.

For more information, visit https://foundationtesting.org/.

CRCOG has a list of qualified engineers, available at: http://crcog.org/concrete-vendors/.

Additionally, I have worked closely with the federal Department of Housing and Urban Development (HUD) to explore how funds from the federal Community Development Block Grant (CDBG) can be used to assist homeowners with crumbling foundations. In September of 2016, I received information from HUD that funds from the CDBG program may be used to assist homeowners. Specifically, CDBG funds can be used for crumbling foundations testing. A municipality that establishes a crumbling foundations with CDBG funding may cover 100% of the costs to test a foundation for pyrrhotite, up to $5,000. Since I have helped open up this avenue to homeowners, additional towns have recieved CDBG funding for pyrrhotite testing.

State Department Of Consumer Protection

To submit a complaint to the State Department of Consumer Protection, please visit https://portal.ct.gov/dcp/Trade-Practices-Division/Deteriorating-Concrete-Foundations. For additional information or questions, contact the Connecticut Department of Consumer Protection at 1-800-842-2649 or email dcp.concrete@ct.gov. The Department of Consumer Protection has also issued a warning to homeowners to be wary of scams to repair or replace faulty concrete. I urge consumers to take precautions before making any payments or signing contracts. Click here to read the Connecticut Department of Consumer Protection's brochure for homeowners.

State Legislature

Reassessment: The State of Connecticut passed Public Act No. 16-45 in May of 2016, which allows Connecticut residents with crumbling foundations to request a reassessment of their home's value from a licensed engineer. Call your town assessor for assistance with this process. Click here to read the law.

Local Municipalities

Some municipalities in the affected region have decided to waive local building and permitting fees associated with construction and repairs to homes with crumbling foundations. Call your town officials for further information on your town’s policies.

Schools: One elementary school in Connecticut has tested positive for pyrrhotite in the concrete used to pour the school. I have worked with my colleagues on the House Committee on Education and Labor to pass legislation out of the committee that would provide funding for K-12 schools with crumbling foundations due to pyrrhotite. As this legislation moves through the House, additional information will be posted here. To read more about crumbling foundations assistance for schools, click here.

More on Resources for Homeowners

Connecticut Congressional Delegation Members Receive Clarification from IRS on Captive Insurance Company, Tax Form 1099s for Homeowners with Crumbling Foundations

November 25, 2019 Press Release

“We are grateful for the response from the IRS providing clarity that CFSIC is not required under federal law and regulations to issue 1099 tax forms to those receiving this critical assistance to repair their homes,” the delegation said.

ICYMI: Crumbling Foundations Captive Achieves Tax-Exempt Status

March 20, 2019 Press Release

Today, the Connecticut Foundation Solutions Indemnity Company, Inc. (CFSIC), also known as “the captive insurance company,” released the following announcement following the Internal Revenue Service’s decision to designation CFSIC as a non-profit 501(c)3 organization. The full press release from the captive insurance company and CSFIC Superintendent Michael Maglaras is included below.

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Courtney Announces Approval of Federal Funds for Crumbling Foundations Testing in Three Eastern Connecticut Towns

March 19, 2019 Press Release

NORWICH, CT – Congressman Joe Courtney announced the approval of $480,000 in federal Community Development Block Grant funds to support testing of crumbling foundations in Ellington, Stafford, and Vernon. The funding was requested by the three towns in a joint application last year as part of Connecticut’s Small Cities Program run by the state Department of Housing, which distributes the state’s portion of federal CDBG funds it receives annually.

Courtney, Larson Announce Free IRS Webinar on Deduction for Crumbling Foundations

October 22, 2018 Press Release

“We want to get the word out that IRS will be holding a free webinar that tax preparers and homeowners can learn more about recent development on tax deductions for foundation repairs,” said Courtney and Larson. “Last week, we announced that the IRS has made it clear that homeowners can “carry forward” or “carry back” a net operating loss under the casualty loss deduction for crumbling foundations repairs. This clarification means that even if the net loss suffered by a homeowner exceeds their annual tax liability, they can carry forward the loss for up to 20 years and can carry back for two years. This development will provide significant help for middle-class homeowners, and we want to get the word out about how they can start using this deduction when they go to file next spring.”

Courtney, Larson Receive Tax Clarification from the IRS for Homeowners with Crumbling Foundations

October 16, 2018 Press Release

“Today, the federal government has once again said ‘yes’ to helping homeowners struggling with the cost and damage of crumbling foundations. This clarification of the tax revenue procedure that we announced last year is going to have significant implications for middle-class homeowners whose repair costs exceed their annual income,” said Courtney and Larson. “It also builds on the critical development we announced last year that the IRS would allow homeowners to claim a casualty loss on their 2017 return to recoup the costs of repairing a home foundation.

In Ellington, Courtney Holds Seminar For Homeowners To Learn More About The IRS Casualty Loss Deduction For Crumbling Foundation Repairs

May 12, 2018 Press Release

“While Congressman Larson and I originally announced that the IRS was going to make this tax relief available late last year, many people are still just learning about the program and the fact that it will be available until 2021,” said Courtney. “Local residents should be aware that the additional three years afforded under this updated guidance we received in February will provide critical time for to make foundation repairs and secure federal tax relief. I would like to thank the Office of the Connecticut Taxpayer Advocate and Congressman John Larson for their participation today.

COURTNEY, LARSON, NEAL ANNOUNCE EXTENSION OF FEDERAL TAX RELIEF FOR CRUMBLING FOUNDATION REPAIRS

February 7, 2018 Press Release

“This is welcome news for homeowners in our districts,” the members said. “The additional three years afforded under this updated policy provides critical time for more homeowners impacted by crumbling foundations to make repairs and secure federal tax relief. Since enactment of the new tax law, we have been in regular contact with officials from the Treasury and IRS to explore ways to extend as much relief as possible to homeowners in spite of the changes made by the law. We are grateful for their attention to our concerns and the support they have provided today to homeowners struggling with the damage caused by crumbling foundations.”

Courtney Statement On State Testing Program For Crumbling Foundations

January 23, 2017 Press Release

“I am pleased that today Governor Malloy has announced promising new steps that the State of Connecticut is taking to address the increasingly urgent problem of crumbling home foundations in northcentral Connecticut,” said Courtney. “As my office determined last August, federal assistance is available immediately through the Department of Housing and Urban Devolvement Small Cities CDBG and HOME block grant programs, and I’m glad that the Governor indicated today that these funding sources will be used. Nothing could fall more squarely within the mission of CDBG to promote community development than stopping this threat to northcentral Connecticut’s housing market. I encourage the General Assembly to support these efforts and continue to investigate the potential use of additional money that is available through HUD. This is a good first step, but much more work will need to be done in order to get a handle on the urgent issue of crumbling foundation which is threatening local families, our communities and the region’s economy.”