Hail damaged the roof on my rental single family. The roof cost $16,000. Insurance paid $15,000, I paid the $1000 deductible.
My best guess is that I add the full $16,000 roof as a new depreciable asset ($15,000 insurance plus my $1000 deductible) .
Do I then show the $15,000 insurance payment as income? If so, where do I enter it as line 3 of the Sched E worksheet only shows RENTAL income. Or is it not reportable income as it was reimbursement for an insurance loss.
No, do not change the roof you have on depreciation. Your insurance paid for the new roof so for tax purposes you continue to depreciate the roof as though the damage did not occur (or your rental home if you do/or did not have a separate asset for the roof. You can add another asset of $1,000 for the additional amount you paid and depreciate that portion beginning on the date your new roof was completed. selecting the Residential Rental Property with 27.5 year recovery.
There is no gain or loss reported on the insurance proceeds.