damaged rental propert

[HDP2]

So I have a rental property - a condo - in a building that was damaged (fine in one unit, and then the units below that one soaked by sprinklers).

Insurance covered one year of lost income. But the repairs (which are just now finishing) stretched into a second year. I couldn't rent the thing if I tried. 
What can I count as a loss? I've paid for management, maintenance, utilities, taxes, but also...mortgage, all of out pocket for an entire year. The HOA's insurance has paid to restore the unit, and my own insurance has paid for the first year of loss of income as well as other expenses I (obviously) won't claim (eg: appliances, which were trashed by contractors, etc). 
So... aside from mortgage interest and taxes...can I claim any of the mortgage I've paid? (my rent used to be above what it cost to maintain the place, but I'm not asking about that amount, just what I've paid). 

[Carl]

The property remains classified as a rental, assuming you intend to rent it out again once repairs are done.

What the insurance paid out as rent, gets reported as rental income in the year you received that payment from the insurance company. So if the damage occurred in Oct of 2021 and you were paid a full year's loss before Dec 31, 2021, that entire amount would be included in the rental income for the entire 2021 tax year. Whereas if you were not paid until 2022, then it counts as rental income for the entire 2022 tax year. Remember, income is reported in the tax year it is received, regardless of what tax year that money may be "for".

Assuming the property still remains classified as a rental, then all normal rental expenses can and should be claimed on the SCH E. I.e.; mortgage interest, property insurance payments, property taxes, HOA dues, etc.

Now, before I continue;

 - Did you have anything other than the structure itself listed in the Assets/Depreciation section, that was destroyed/damaged, that were thrown out? For example, you may have been depreciating some of your appliances that were trashed and therefore discarded.

 - What did you pay out of your pocket for restoring the property back to the condition it was before your loss? I'm not talking normal rental expenses stuff. For example, if you had to pay $1000 out of pocket for reconstruction costs, I want to know that amount. If you had to pay out of your pocket for the new countertops, kitchen cabinets, and/or stove, I'd like to know that please.

I'm asking for this so that I can assist you with getting things back on the right track in the correct way, for your cost basis and depreciation that has been occurring since your loss. If your out of pocket money increases your cost basis then you need to show this increase correctly, and make sure you don't screw up the depreciation history.  (Your cost basis may or may not be affected, depending on your out of pocket expense, and what that out of pocket money paid for explicitly)

[HDP2]

Hey there Carl -
Thanks for your help.
So, my insurance paid for nothing in 2022 in terms of loss of income (I reported the 2021 income from the insurance company as rental income for that tax year).
I'm not listing anything in the asset/depreciation because essentially (almost) whatever was damaged is being replaced - and the place had to be gutted. We're talking down to the studs. 

This year, I might have to buy a couple of things that neither my insurance nor the HOA's insurance is willing to cover. But that's a 2023 issue -- I'll deal with those receipts when they materialize.

Aside from paying for the things I listed (management, maintenance,  taxes, insurance, mortgage), my out of pocket expenses for repairs aren't massive (eg: a table and built-in cabinets that were damaged but contractors refused to sand & refinish).
What I was asking is if I can claim the mortgage principle as a loss since...I could not rent the unit out as it uninhabitable, and not due to any negligence on my behalf

[Carl]

What I was asking is if I can claim the mortgage principle as a loss

No. The principle is never deductible. Only the interest is claimed as you have always claimed it.

I'm not listing anything in the asset/depreciation

I think we're having a communications disconnect here. You must have at least the property itself listed in the assets/depreciation section, since I'm sure you're aware you're required to depreciate the property for so long as it's in service. If you took the property out of service in 2021, then you can't just delete the asset. You "must" show it's disposition. Also, if you removed the property from service, that severely limits what you can deduct, to just property taxes and mortgage interest as a SCH A itemized deduction. So I'm confident (and hopeful) you've left the property in-service, and have continued to depreciate it in the assets/depreciation section.

[HDP2]

Ah sorry, yes, looking at Turbo Tax I now see what I was entering was under "expenses /assets (depreciation)" heading. For some reason I thought I had to look at like, the depreciation value of my old fridge or whatever.

Much thanks!

[Carl]

For some reason I thought I had to look at like, the depreciation value of my old fridge or whatever.

Apparently, since you're using the online version, you don't see the same screens I do in the CD version. Basically, if you have assets (such as the fridge) that were damage beyond repair and you discarded them, then there's a few things to keep in mind in claiming a loss for those items.

 - For listed assets that are "not" classified as rental real estate, you'll just work through the asset and on the screen asking you "Special Handling Required?" you'll select No. The next screen will ask you for sales information. (You sold it to the insurance company). Your sales price will be $0. That way, the remaining amount of depreciation not yet taken is accounted for with the program (not you) figuring the monetary loss for you.

[HDP2]

Got it - much thanks!