I had a rental property that flooded in Louisiana and received and insurance payment. The insurance settlement was more than the cost of the repairs. What do I do?

[FRB]

Do I have to claim the difference as income?

[LinaJ2018 · Accepted solution]

If your insurance reimbursement for the lost or damaged property is greater than the cost, you may generate a capital gain as your income.  You are advised to file a Form 4684 Casualties and Thefts to claim a casualty loss and if there is a gain being generated, the program will create a Schedule D with the capital gain and finalize your Form 1040 to file.

To enter your casualty loss  and possible capital gain in TurboTax online program, go to:

• Sign in to your account and select Pick up where you left off
• At the upper right corner, in the search box, type in casualty loss, then Enter
• Select Jump to casualty loss
• On-screen, Stolen or Damaged Items, answer Yes to the question to continue 

[FRB]

by cost do you mean the actual cost of the property or the cost of repairs?

[LinaJ2018]

Cost of the property.  Follow the steps in the program and it will guide you through.

[FRB]

My payment was less than the purchase price. Do i just leave the insurance money and expenses for flood repairs off my return and only enter repairs and expense prior to flood?

[LinaJ2018]

You should still follow the instructions to let the program calculate your casualty loss deduction if applies.

[FRB]

i went thru and filled out the form you recommended and it is showing zero deduction.

i still am not sure what to do with the expenses used to make repairs? There was never any questions about the expenses. The insurance covered the cost do i just leave it all off the return?