If I received money from an insurance claim on a house rental, is it considered income?

[musicmaker1]

I had wind damage to the roof of my rental and insurance paid for a new roof. Is the money they paid income and the cost of the new roof expenses?

[pk · Accepted solution]

@musicmaker1 , generally  and mostly people consider  the  difference between the cost of repair and insurance payment as an expense for the rental property --- say  the insurance judged the damage was 100,000 and they paid  you 80,000 for the claim. Then when  you get the repair done  you  paid 100,000 to a contractor. Thus you have a 20,000 that is repair expense borne by you and shows up on your Schedule-E.

The assumption here is that by this repair you have restored the FMV of the house to that just prior  to the damaging event. by this repair.

Ideally , if the FMV of the house has  gone up by the repair then to the extent the value has increased beyond that  just prior to damage, that amount needs to be declared as new asset and depreciated over the useful life of the asset.