It depends. If all of the money from the insurance company for strictly for lost rent, that has been reported correctly. If you received money from insurance for any part of the building and it was not used to repair the building, this portion would be included in your casualty loss (or gain). The sale of the property after the casualty entry would be reported as Sale of Business Property.
Casualty Entry:
- Open your TurboTax return: Follow the steps in this link: What if I have property that was lost or damaged?
- First, in the rental activity, go to each asset, on the screen 'Did You Stop Using this Asset in 2024? select 'Yes'.
- Enter the date of sale or disposition and select Yes for 'Special Handling Required?' (this takes all assets out of service so they do not carry to the 2025 tax year.
- Total the cost of all assets, total of depreciation for all years (includes 2024) for the casualty fire entry (link above). Keep land out separately and don't use it here.
- Once the casualty is entered, you will complete the Sale of Business Property. The only cost basis you will have left is the land, Everything else will have been used in the Casualty (fire) entry. TurboTax will carry this to Form 4684 and then to the appropriate forms for your overall income or loss.
Sale of Business Property: (the actual sale after reporting the casualty.
- Business Income and Expenses at the top
- Scroll down to Less Common Business Situations
- Select Sale of Business Property
- Select Sales of business or rental property that you haven't already reported.
- Answer 'Yes' to Do all of the following apply...?
- Enter your sales information:
- Description of the Property (Land)
- Sales Price/Sales Expenses
- Date acquired and date sold
- Cost
- Depreciation (none for land, leave blank)
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