Homeowners with tainted drywall might get tax relief

Homeowners with tainted drywall imported from China may get some relief on their tax returns.

The Internal Revenue Service is considering whether to allow homeowners to claim a casualty loss on their tax returns if they have Chinese drywall that emits an "unusual or severe concentration of chemical fumes that causes extreme and unusual damage," according to a letter that the IRS sent to U.S. Sen. Bill Nelson, D-Fla.

It is unclear exactly how much homeowners could claim, but the letter said the amount of such a claim is generally the difference between the value of the house before and after the event causing the damage.

This could mean some homeowners with Chinese drywall would be eligible to claim tens of thousands of dollars on their tax returns.

"This is coming as some relief to these families," Nelson said. "Considering the terrible circumstances they have had to endure, it's only right that they are given special consideration."

The Florida Department of Health has received about 480 complaints from homeowners. Several federal agencies, including the U.S. Consumer Product Safety Commission, are investigating.

The effect of the drywall is still under investigation, but homeowners across the nation have complained their drywall emits a corrosive gas that damages appliances, gives off a rotten-egg stench and may cause health problems.

Health complaints include dry eyes and respiratory problems.

The drywall was used in as many as 100,000 homes across the nation during the housing boom, but the majority of the cases so far have been found in Florida.

Builders normally use domestic drywall but the aftermath of hurricanes, combined with growing demand, led to a drywall shortage. Builders and subcontractors turned to imported drywall from China. Most of the affected homes were built from 2004 through 2007.