June 26, 2009

Between the years of 2004 and 2007 the United States domestic drywall supply ran short forcing builders and suppliers to import from China.  The drywall was made by fly ash waste, which contains high levels of sulfur compounds. 

Homes built with this defective drywall have now been found to emit these sulfuric gases, which causes noxious smells and corrodes all types of metals within the home.  Many homeowners have also reported health related issues such as nose bleeds, sinus infections, headaches, coughing, and respiratory problems. 

Several U.S. lawmakers are requesting to see a special tax deduction to help homeowners, who have been affected by defective drywall, recover losses.

Senators Mark Warner, Jim Webb, Representative Glenn Nye of Virginia, have all teamed up with Senator Bill Nelson of Florida to request that the IRS clarify if homeowners are eligible for a casualty loss deduction due to the side effects of Chinese drywall

Section 165(h) of the Internal Revenue Code “allows taxpayers to deduct casualty losses if the property was not connected with a profit-making venture and if the property was partially of fully destroyed due to an unforeseen, sudden and unusual event.” 

The tax deduction is far from a solution to the Chinese drywall problem. However, it does give some relief to the families affected by this crisis.  Many homeowners will need to have the defective drywall stripped out of their homes and replaced.

Some victims in Florida have tried to look into homeowners insurance for some type of compensation, but many insurers exclude coverage for damages caused by construction defects. This may be also true for insurers in other states.

Chinese drywall lawsuits have been filed by many homeowners against the manufacturers, importers, suppliers, retailers, and builders seeking compensation for their damages and losses.  A resolution to this problem may take years, and homeowners will be stuck in difficult financial positions having to pay for repairs, their current mortgage, and possibly an alternate place to live.  

The defective drywall lawsuits were recently consolidated by the Multidistrict Litigation panel in New Orleans, and will be handled by Judge Eldon E. Fallon.


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