Traditional IRA contributions can be tax deductible or partially tax deductible based on MAGI. In 2014, an individual with a MAGI of up to $70,000 is eligible for at least partial deductibility. There are no income limits on who can contribute to a traditional IRA.
When the water heater breaks / leaks whatever the pressure tank is going to loose pressure telling the pump to come on and the pump will run continually as it can not build pressure to shut it off.
The deterioration and damage to a water heater that bursts. However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. Most losses of property caused by droughts.