I received $17,874.10 from an insurance claim on my rental property for water damage. how should I report on turbotax?

[ttran28]

I received $17,874.10 from an insurance claim on my rental property for water damages. the restored costs $20,756.00.  how should I report on turbotax?

[PaulaM · Accepted solution]

The insurance proceeds do not need to be reported as they were less than your repairs. You will need to reduce your repair expenses by the insurance so that the total repair expenses deducted for the damage is $2,881.90.

[ttran28]

Thank You!   I have another question, I have deductible $6,000.00 for water damages in my rental house, can I report as deduction on my rental Schedule E tax return? I also received some money for loss of rental income from insurance company on January 2018 but the rental loss income from a few months of 2017.  Should I report loss income in 2017 or 2018 tax return?  Thank you so much for help!!

[PaulaM]

You are welcome 🙂  Do you mean that your insurance deductible is $6k? If so, you would list that under casualty and losses under Deductions and Credits. Report any monies received from insurance in 2018 on your 2018 return, even though the damage expenses are deducted in 2017. This will correct the over expensed deduction in 2017.

[ttran28]

Thank you so much for the quick responses and helpful answers to my question!! Yes, the $6,000 is insurance deductible they subtract when they mail out the insurance claim check.  One more question, so I can list $6,000 under casualty and losses under deductions and credits on Schedule E under rental property?  I used the Turbox tax software, which line and section exactly I need to report $6K as casualty and losses on Schedule E?  Thank you again for your help!!

[ttran28]

Should I report the $6K in schedule A Itemized Deductions Casualty or theft loss(es) section. Do I need to attach Form 4684? Or should I report the $6K in Schedule E Supplemental Income and Loss for because it is related to rental property and which line or section should I report on Schedule E?  I would like to do the right thing.  Thanks again for your help!!

[PaulaM]

Casualty losses are deducted on Schedule A, not the Schedule E. It doesn't matter that it was a rental property loss.

[ttran28]

Thank you so much for your tax advice and quick responses!!! I can go finish my tax return now!! I appreciate your help!! One last question, do I need to attach form 4684, when I report $6K in schedule A itemized deduction as Casualty losses?  Thanks again!!

[PaulaM]

It is prepared for you in the software. Form 4684 will efile with the rest of your required tax documents. If mailing, you will sequence the form as you would the other required documents. 🙂

[ttran28]

Great!  Thank You! one more question please... I just think about it right now... have to ask your advice my repair expenses deducted for the damage is $2,881.90 after subtract insurance claim check , since it is over $1,000 can I report as expenses or capital improvement and have to depreciate through the year?  I would like to take it as expenses but not sure... like to do the right thing! Thanks!

[PaulaM]

Not an improvement.

[ttran28]

Thank you so much!! You have a great day!!

[PaulaM]

You are welcome 🙂

[ttran28]

Need to ask for advice on my calculation of FMV before casualty losses and FMV after casualty loss and reported on insurance deductible $6K on my rental property that I reported as Casualty losses on Schedule A Itemized deduction correctly. Is my number look reasonable? See below detail! Thank you for your help!!
Form 4684  Casualty or theft losses for rental property
 Line 20 cost or adjusted basis                        106,183
 Line 21 Insurance reimbursement                    17,874
 Line 23 FMV before casualty or theft              152,930
 Line 24 FMV after casualty or theft                 129,056   (152,930 - 17,874 - 6,000)
 Line 25 Subtract Line 24 from Line 23              23,874
 Line 26 Enter the smaller of line 20 or line 25  23,874
 Line 27 Subtract line 21 from Line 26                 6,000
 I can deduct insurance deductible for my rental property $6K as Casualty losses on Schedule A itemized deduction?  Thank you so much for your help!

[PaulaM]

Yes, that looks good 🙂