Gents, under US tax law it wouldn't be a "capital loss." It is quite a different beast and is called a "casualty loss." Report this loss on Form 4684 ("Casualty and Theft Losses"). The bad news is that the deductible amount is limited. First you must reduce the loss amount by any recovery (that's pretty obvious) and then also reduce it by 10% of your adjusted gross income. If there is an amount remaining after these reductions then that is generally going to be your deductible loss.