1. In the US, additional living expenses (ALE) are paid by insurance companies and not taxable when related to being displaced from your home. However, I don't know if this is a second home or a rental. If it is a rental property, then income from an investment would be taxable income.
2. Expenses would add to the basis for a second home. If you are using a Sch E rental for the apartment, you can include those expenses on your Sch E.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
