It depends. Based on the price, if you did a complete remodel to the house which would mean you extended the life of the house which means this would be a capital improvement instead of a repair or maintenance.
A capital improvement is considered an asset and not an expense and will need to be depreciated over its useful life of 27.5 years. You will need to walk through the steps of listing the improvements as an asset and then taking depreciation on them. The repairs would be the $183,000 that you paid. You would also need to decrease the "old asset" by the amount of the damage. This is mostly a depreciation/asset life change and not an actual value change.
If any part of the insurance proceeds were for lost rent, this would be claimed as rental income.
If you did not do a complete remodel, or make any capital improvements and the cost was to cover cleaning the smoke off the walls and removing the odor, then you would report the $21,000 as an expense.
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