It appears that the cost of restoring the property to its original condition would be deductible as part of a Casualty Loss. You could go back and Amend your 2022 Return to include this amount in your original loss claim, or claim it on your 2023 return as additional expense related to prior loss.
"The cost of repairing damaged property isn’t part of a casualty loss. Neither is the cost of cleaning up after a casualty. But you can use the cost of cleaning up or of making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions:
- The repairs are actually made.
- The repairs are necessary to bring the property back to its condition before the casualty.
- The amount spent for repairs isn’t excessive.
- The repairs take care of the damage only.
- The value of the property after the repairs isn’t, due to the repairs, more than the value of the property before the casualty."
See the IRS Pub 547, Casualties, Disasters & Thefts for more detailed info.
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