Welcome back, everyone! Stephen Morris here with AdviseRE, and in today’s special edition, we’ll be discussing the impact of the LA wildfires on LA County residents and investment opportunities within the City of Los Angeles.
Specifically, we’ll cover:
- Tax filing deadline extensions
- Tax relief options available
- Insurance implications for disaster-affected areas
- Investment impacts, including the rising cost of construction, development challenges, and the long-term outlook for LA County’s housing market.
With that, let’s get started.
📅 Tax Filing Deadline Extensions & Relief
One of the most immediate impacts of the wildfires is the extension of tax filing deadlines. This affects all tax returns, including:
✅ Partnerships & S-Corps: Originally due on March 17, 2025, now extended to October 15, 2025.
✅ Individuals, Nonprofits, & Corporations: Also extended to October 15, 2025.
Most importantly, the estimated tax payment deadlines for:
✔️ January 17, 2025 (Q4 of 2024 tax year)
✔️ April 15, June 15, and September 15, 2025 (Quarterly estimates for 2025 tax year)
All have been pushed to October 15, 2025.
💡 What This Means for You:
- You don’t need to file or request an extension by March or April.
- Estimated tax payments should still be calculated, but you can hold onto your cash longer.
- Consider saving the money in an interest-bearing account to earn extra while waiting for the IRS deadline.
📉 Casualty Loss Deductions
For those who suffered property losses from the wildfires, there may be an option to claim a casualty loss deduction on your tax return. However, here’s what you need to know:
✔️ Losses must NOT be covered by insurance to qualify.
✔️ Must be itemized on your tax return and supported with substantial documentation.
✔️ Losses cannot carry forward to future tax years if they exceed your taxable income.
📌 Required Documentation:
- Proof of insurance reimbursement vs. actual losses.
- Photographic evidence of the damage.
- Receipts and records of lost property value.
While this deduction exists, we hope most homeowners are properly insured and won’t need to rely on it.
🏗️ Impact on Construction & Investment Opportunities
The wildfires have removed nearly 15,000 housing units from the market, including homes and apartment buildings. Given that Los Angeles County only produces about 15,000 new units per year, this is equivalent to an entire year’s worth of housing wiped out overnight.
📈 Expected Market Effects:
- Housing and rent prices are likely to increase due to reduced supply.
- The city is promising streamlined permit approvals for rebuilding in affected areas.
- However, actual reconstruction could take at least two years due to:
1️⃣ Environmental cleanup by the EPA before construction can begin.
2️⃣ Infrastructure repairs (roads, power lines, plumbing) delaying the rebuilding process.
💡 Realistic Timeline:
City and county officials are slow-moving compared to private enterprise. While two years is an optimistic estimate, in reality, full reconstruction could take 3–5 years.
🚧 Rising Construction Costs & Underinsured Homeowners
The cost of construction in Los Angeles has been rising for years, and with increased demand, these costs are only expected to go higher.
📌 Key Cost Drivers:
✔️ Stricter building codes requiring fire-resistant materials.
✔️ Higher material and labor costs due to increased demand.
✔️ Underinsured homeowners struggling to cover rebuilding expenses.
💰 Example:
- Many homeowners had insurance covering $150–$200 per square foot for construction.
- Today’s actual cost is closer to $350–$400 per square foot.
- Luxury homes in areas like Palisades could see costs exceeding $1,000 per square foot.
💡 What This Means for Homeowners:
Many will likely sell their damaged properties rather than attempt to rebuild, creating new opportunities for developers looking to buy land in affected areas.
📊 Investment Strategy: What Should Landlords & Investors Do?
Given the supply shortage and rising rental demand, now may be the best time to invest in Los Angeles real estate.
✅ If You Own Property:
- Hold onto your investment as housing prices & rents increase.
- Consider renovating or upgrading your property to capture higher rental yields.
✅ If You’re Looking to Invest:
- With 15,000 units removed from the market, housing demand will surge.
- Rental growth and property appreciation will likely continue upward.
📢 Call for Action:
While the city is streamlining permits for fire-damaged properties, we believe they should also streamline permits for existing, unaffected properties.
- Rebuilding in disaster zones could take 3–5 years.
- But new housing in unaffected areas could be built in 12–18 months.
- A faster permitting process could provide much-needed housing sooner.
🔥 Final Thoughts: Wildfire Aftermath & Real Estate Outlook
The LA wildfires have had a devastating impact, but they have also created new economic and investment realities.
✔️ Tax relief is available, with extended deadlines until October 15, 2025.
✔️ Casualty loss deductions exist but require substantial documentation.
✔️ 15,000 housing units were lost, worsening the city’s housing crisis.
✔️ Construction will be delayed due to environmental cleanup & infrastructure repairs.
✔️ Costs are rising, making rebuilding unaffordable for many homeowners.
✔️ Real estate investors stand to benefit from rising rents and home values.
🏡 What’s Next?
If you were affected by the wildfires and have questions about tax relief, real estate investments, or rebuilding, we’re here to help.
📧 Reach out to us via email for a consultation. We’d be happy to assist you!
Thanks for watching, and we look forward to seeing you in our next video. 🎥🔔
