#AI #OpenAI #ChatGPT What are the tax implications if your house burns down?

I asked ChatGPT: 

"If a natural disaster causes e.g., your house to burn down, is the loss of that tax deductible?

Do you have to go on paying property taxes based on the last assessment of its value?"

ChatGPT answered:

Here’s a breakdown of the answers to your questions:

1. Is the loss of your house due to a natural disaster tax-deductible?

Before 2018: If your home was destroyed in a natural disaster, you could claim the loss as a casualty loss deduction on your federal income taxes. The deductible amount was the lesser of:The decline in the property’s fair market value (FMV) as a result of the disaster, or

Your adjusted basis in the property (generally the purchase price plus improvements).

Post-2017 (current rules under the Tax Cuts and Jobs Act): Casualty losses are only deductible if the loss occurs in a federally declared disaster area. This means:The disaster must be declared by the President as eligible for federal assistance.

Your loss must be reduced by any insurance or other reimbursement you receive.

Additionally, the loss must exceed 10% of your adjusted gross income (AGI), and you must itemize deductions.

It's important to document your loss thoroughly and consult with a tax professional for specifics.

2. Do you have to keep paying property taxes on a destroyed house?

General Rule: Yes, property taxes are typically based on the assessed value of the property as determined by the local tax authority, regardless of the property's condition after a disaster.

Relief Options: Many jurisdictions offer temporary relief or reassessments in cases of natural disasters. You might:Apply for a temporary reduction in assessed value due to the damage.

Be eligible for a refund or waiver of property taxes if your property is uninhabitable or destroyed.

Find specific programs in disaster-prone areas that provide tax relief, such as California's disaster relief reassessment program.

You should contact your local tax assessor’s office to inquire about the options available to you. Each jurisdiction has different rules and procedures for granting tax relief in disaster situations.

I said: Thanks!

It said: You're welcome! 😊 If you have any more questions, feel free to ask. Stay safe! 🌟

I asked ChatGPT: 

"Yes! Is there any way you could recover all those property taxes you paid before your house burned down?"

ChatGPT answered:

Recovering property taxes you paid before your house burned down is generally not possible because those taxes were assessed and paid for services and infrastructure provided by your local government during the time you owned and used the property.

However, here are a few scenarios where you might get some relief:

1. Pro-rated Refund for Unused Portion of Taxes

In some jurisdictions, if a property becomes uninhabitable or is destroyed mid-tax year, you might be eligible for a pro-rated refund for the portion of the year after the disaster.

Example: If your house burns down halfway through the year, some areas allow you to claim a refund for the remaining portion of the year because the property is no longer usable.

What to do: Contact your local tax assessor or collector to see if this type of relief is available.

2. Retroactive Reassessment

Some states and local governments offer disaster-related reassessments where they adjust your property’s value retroactively to account for damage or destruction.

If they lower your property’s value retroactively, they may issue a refund or credit for the overpaid taxes based on the new assessed value.

3. Claim Through Legal or Insurance Mechanisms

Insurance reimbursement: If you had property insurance that included coverage for loss of use or damage, it might cover property taxes (or their equivalent) as part of the compensation.

Lawsuits: In rare cases, if a third party was responsible for the disaster (e.g., a utility company causing a wildfire), you might recover property taxes as part of a settlement.

4. Tax Credits or Incentives

If rebuilding or recovery involves certain government programs, you might qualify for tax credits or property tax deferrals that offset prior payments.

5. Hardship Programs

Some municipalities offer hardship programs where you may apply for partial forgiveness or deferral of property taxes based on financial strain caused by the disaster.

Key Step:

Reach out to your local tax assessor’s office or county treasurer to understand your options. They might have programs for disaster relief that are specific to your area.

Let me know if you'd like assistance finding details for a specific location! 🌟

I said: Thanks again!

It said: You're very welcome! 😊 I'm glad I could help. If anything else comes up, don’t hesitate to reach out. Wishing you all the best! 🏡✨

Note: The answers are copied exactly from those given to me by OpenAI

A good way to fight the reigning Bureaucracy Autocracy is with a Citizens’ Democracy, empowered by Artificial Intelligence.

ChatGPT - OpenAI: Getting to know you!

 

We need a Pro-Equality-Tax on income and wealth that keeps the redistribution profiteers away

I am convinced it behooves all of us who have much more than those who have much less to think about the need of a Pro-Equality tax on income and wealth.

That need is mainly the result of interferences and abuses of free markets, many of these promoted by governments, many of these hidden in well-intentioned regulations.

If a Pro-Equality-Pot were to be redistributed through current ordinary channels, not much would change, in fact inequality and other problems could get much worse.

As an absolute minimum we must keep all redistribution profiteers away.

The Pro-Equality-Pot should be distributed in equal parts to all nationals, line through a Universal Basic Income scheme, and that should not cost, tops, more than 2 percent to do.

To achieve that I believe it is indispensable to separate the Pro-Equality taxes from all other ordinary taxes paid to keep governments running.

That separation would bring much needed transparency, which also helps us to make it harder for dangerous demagogues to seed discord in our nations.

Initiatives like a Universal Basic Income sound promising. Let us stop the redistribution profiteers from killing these. 

The Universal Basic Income has nothing to do with the Right or the Left; it has all to do with the Radical Middle.

The Universal Basic Income is a citizen to citizen initiative... it must keep out the populists and the demagogues wanting to profit on the redistribution.

PS. I come from Venezuela a nation that in 2005-2015 received incredible amounts of net oil revenues. During that decade the poorest 40 percent of its people, from a government that identified itself as 21st Century Socialism, did not get even 15 percent of what should have been their per capita share of that income. I have fought a lot for the distribution to the citizens of the oil revenues. Unfortunately, until now, the redistribution profiteers have had the day.

The keeping the big lean tax

No matter how optimistic we can be about that all the assets the US government acquires during the current financial crisis will be fairly priced, there is no doubt that the whole crisis is going to be extremely expensive for the public sector. The costs will have to be paid by taxes or, in its absence, by inflation.

In this respect society has a vested interest in finding new equitable ways of how to pay for it, and that these are aligned with the new global realities and interfere as little as possible with the recovery of the economy. The following is a second proposal that follows up on “An income tax on profits from intellectual-property monopolies.”

The keeping the big lean tax: Tax progressiveness based on market share.

There is nothing wrong with a corporation striving to obtain a large market share. Indeed since it is the result of having a better motivated and better organized commitment to exploit comparative advantages in order to satisfy the market with better products or services at better prices, the fight for more market share benefits us all.

That said, while the market share grows, for all the good reasons, growing market powers might tempt the corporation to use competitive tools of dubious nature which could diminish the marginal returns for the society, to such an extent that they could perhaps even turning into costs that erode all previously obtained benefits.

I therefore propose we introduce tax progressiveness based on market shares. For instance if a corporation has below 10 percent of market share a 30% income tax rate applies but, if it has a 100 percent market share then it should be taxed at for instance a 50% rate, with a linear function for the in-betweens. Alternatively, if we want to avoid making the “after-tax” subsidies of inefficiencies higher it could be a progressive sales tax.

Of course the market share tax is not be applied to those corporations who have the financial returns on their activities otherwise regulated, such as the electricity distribution companies.

Of course in banking where the bigger-you-are-the-more- it-hurts-when-you-fall-on-us, a tax on size should be immediately applied, before we run out of the small local banks that do not need the credit rating agencies to know us.

PS. In the case of some behemoths, like Facebook, I prefer they help fund an unconditional Universal Basic Income with 40-50% of the ad revenues they obtain exploiting our own personal data.

The human heritage dividend:

No matter how optimistic we can be about that all the assets the US government acquires during the current financial crisis will be fairly priced, there is no doubt that the whole crisis is going to be extremely expensive for the public sector. The costs will have to be paid by taxes or, in its absence, by inflation.

In this respect society has a vested interest in finding new equitable ways of how to pay for it, and that these are aligned with the new global realities and interfere as little as possible with the recovery of the economy. The following is one proposal.

The human heritage dividend: An income tax on profits from intellectual-property monopolies.

Most—perhaps all—intellectual-property rights are awarded to the runner of the last leg in a relay race run by generations of human beings and depending on their ingenuity, creativity, and sheer efforts. The earlier runners allow the new laureate to cross the finish line victoriously, and then hold up the trophy for a finished idea, but not for its start.

Most often, even though you might hope you are running the last leg, there can never be any real certainty about that. Sometimes running the last leg (or any leg) can be easy; sometimes it requires much effort by a large team, and it costs billions in money. Society, in order to stimulate the ingenuity, the creativity, and the sheer effort of all the runners in the relay, and thereby help to take the world forward, has decided it needs to certify the intellectual-property rights of the winner.

The downside of this arrangement is that all intellectual-property rights awarded create a monopoly right that—as it can be exercised with little or no regulations, restrictions, and oversight—can unfortunately and quite easily be overexploited.

Also, since all intellectual-property rights awarded impose on society an obligation to defend and enforce those rights in many ways which costs money, the question remains whether it would not have been better to use these resources for other purposes like financing some of the other runners in the relay?

I find no logic or justice in assessing the taxes of a business venture that has to compete naked without any protection in the market at the same rate as a project that has been awarded the monopoly of an intellectual-property right, one to which prior generations of humanity have contributed and in legal defense of which the society invests much money.

I therefore propose that all profits generated from intellectual-property rights should pay an excess-profit income tax, something like 20%, with half of these revenues used to reimburse society for the costs of defending the intellectual-property rights, and the other half employed to help finance the other runners in the human relay, especially those developing vital goods that can serve us all.

PS. Nowadays I would argue that 90% of those tax revenues should go to help fund a Universal Basic Income.

A second proposal: A market rate based progressive corporate income tax.

El Universal, Caracas "A tax on intellectual property profits" October 2008