Whether or not losses on your rental property are deductible or not will depend on other things in your tax return. TurboTax will make your losses deductible or suspend passive losses as necessary for your particular situation.
You can deduct the water damage, to the extent that it is not covered by insurance, as a repair expense on your rental property. However, if you have claimed any insurance reimbursement as income, you may enter the entire repair cost.
