Oakland Fire Victims Get Double Helping of Dismal Financial News
Residents of the burned-out Oakland hills have gotten two new doses of bad news.
First, Internal Revenue Service officials in the Bay Area announced that homeowners cannot deduct the mortgage interest paid on houses that burned down in last October’s brush fire. The reason: A home must exist to qualify for the deduction.
An IRS spokesman said the agency doesn’t like the rule but can’t change it without the say-so of Congress.
“We’re very unhappy about being placed between a rock and a hard place,” IRS regional spokesman Larry Wright said.
About 2,700 homeowners lost their houses in the fire, but the IRS wasn’t sure how many would be affected by the lost tax break. Some are believed to have used insurance checks to pay off their mortgages.
Second, a state task force convened to study the fire that killed 25 people and did more than $1.5 billion in damage concluded this week that it will take new taxes to avoid a recurrence.
The panel found that thick, uncleared brush--more than eucalyptus trees--fed the fire, and that firefighting was stalled by narrow streets and a communications breakdown.
The task force urged a new fire prevention tax to remedy those problems and to modernize the water supply system for firefighters.
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