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Deductions & credits
You should increase the cost basis of your house by the costs of improvements, but also reduce the cost basis by all insurance reimbursements.
If you have the insurance company pay costs directly, then those amounts are simply excluded from your cost basis calculation. While the improvement increases your value, the reimbursement decreases it.
For this info at the IRS, check out the last paragraph at the IRS tax topic resource here.
‎June 6, 2019
7:16 AM