Rental property fire damage insurance paid out but property not sold

[pagirl65]

I have a rental property that had a fire in March 2023. The entire property is uninhabitable. The insurance company paid out a flat amount of money (to include rental income).

There is no plan to rebuild the property and it has not been sold yet in the 2023 year.

Where do I report the money paid from the insurance company? I know I put the amount of rental income under income, but what about the rest.

I read a post to put it all under income, however when I try to work under depreciation and assets- it shows up under "less common business situations" as sale of business property. 

As if it is in there 2 times...

Help...

[M-MTax · Accepted solution]

To the extent the insurance payment was to compensate for lost rental income, it's included on your return as such on Sch E.

To the extent the insurance payment was to compensate for property damage, it is not taxable unless the payment exceeds your basis in the property.

[pagirl65]

Thank you.

How do I put this into Turbo Tax home and business? Part of the payment was for income loss and the rest was for the property damage.

[M-MTax · Accepted solution]

You don't need to put the part that was for damage into Turbotax until you sell the property unless you want to immediately reduce your basis to zero and consider the insurance payment a "sale".

The part that was for lost rental income should go in the section for rental properties.