If you are sure that these are repair expenses and that at the completion of them the property was returned to the value it had before the water damage then yes, you will enter them under repair expenses.
Be sure to only enter those expenses for which you did not receive insurance reimbursement and retain any records that prove this. Also, retain any records that show that the value of the rental home was not increased or improved by the repair work. As long as the fact that the value of the home has not increased is true then you can deduct the repair expenses in the year that they occur instead of depreciating them.
If, after all of the repairs are done, the value of your home has gone down then you will receive benefit for this upon the sale of the property. You will not decrease the basis at this point because of the water damage. But when you sell the loss will reflect the decrease in value.
You can't receive a deduction for lost rent. Since you didn't take it into income you can't take a deduction for it.
The 'applicable financial statement' that the IRS refers to is the one you create in reference to managing your property.
The production of property is referring to creating a new rental space. If your repairs changed the rental space in any way to make it better than it was when you first started then you have the production of property.
@gulsheenk
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