No, don't include the insurance reimbursement payments as income. You are correct in that you will need to amend your 2021 return to include your casualty loss. When calculating your casualty loss, include in that calculation the total amount of insurance reimbursement you received. Here is the formula you will need to use when calculating your casualty loss:
Take the lesser of:
- the decrease in the property's fair market value due to the casualty, minus any salvage value and insurance proceeds, or
- its adjusted basis less insurance proceeds.
The amounts you paid the contractor are a rental expense and should be reported in the rental expense portion of TurboTax. Regarding depreciation, because the restoration included different assets, such as appliances, floor, and new windows, those different assets are depreciated over different time spans. For example, you will recover the cost of the new appliances sooner than the cost associated with the new floor. Therefore, each asset will have its own depreciation schedule. Do not add all of the new items together and take depreciation based on the total dollar amount of all new items.
@Punky2
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