I've always suggested/recommended one take the sale path. It's rather tricky though with TurboTax, because you have to separate out the structure and the land, since you're not selling the land. But it's perfectly doable.
You just work through the existing structure/land asset. You reduce the "COST" by the value of the land, then enter a zero for the value of the land. That keeps the depreciation along with the depreciation history in check.
Then you enter a new rental asset making the COST and COST OF LAND boxes the same. That way, there's no depreciation on the "land" asset, and it's still accounted for. You still use your original acquisition/conversion dates too.
Then you allocate your "sale" price (the insurance payout) between the structure asset and the separate roof asset. When done, you'll still have the land. If you sell later down the road (the two year thing applies, I think) then you'll report the separate sale of the land in the tax year you actually sell it.
Otherwise, if you rebuild and immediately place it in service, you simply enter an entirely new rental property with your COST being the original cost basis of the land, plus your rebuild cost. Then the COST OF LAND will be that original cost basis. Depreciation will start anew from year one, and you can then completely delete the "old" rental which is only keeping track of the non-depreciated land anyway.
