A casualty loss may be considered a direct expense if the loss is confined to the part of the home used for the business. The loss is indirect if it involves both the business and non-business portion of the house. However, if the loss is totally unrelated to a portion of the house used for business, it is non-deductible as a home office expense. (2017 IRS Pub 587, page 8) Note: Personal casualty losses aren’t allowed for 2018 through 2025.