topic Rental property casualty loss due to fire and capital gains in Investors & landlords

Rental property casualty loss due to fire and capital gains

rmcmahon15 — Mon, 09 Mar 2026 08:09:11 GMT

I own a rental property that had fire/smoke damage in 2021. This was not a total loss on my property. My insurance company provided payment for property repairs of $22,921. I had to pay my deductible of $2642. Does the fact that I had to pay a deductible qualify me for a casualty loss? If so how do I claim the loss. I am planning on selling the property in 2022. How do the insurance payments factor (if at all) into the capital gains calculations?

Re: Rental property casualty loss due to fire and capital gains

ColeenD3 — Sun, 13 Mar 2022 18:43:16 GMT

Yes, you can take the loss, and yes, the amount will lower your basis.

Your original basis in property is adjusted (increased or decreased) by certain events. If you make improvements to the property, increase your basis. If you take deductions for depreciation or casualty losses, reduce your basis.

To enter this in TurboTax:

Got to the "Federal Taxes" tab
Click on "Deductions & Credit"
Scroll down to "Other Deductions and Credits" and click on "show more" to the right of it
Click "Start" next to "Casualties and Thefts" continue to follow the onscreen guide.

Pub 551

Re: Rental property casualty loss due to fire and capital gains

rmcmahon15 — Sun, 13 Mar 2022 18:46:04 GMT

Thanks for the quick reply - so in this example the adjustment in my basis would be in the amount of my deductible (not the entire amount my insurance company paid) for which I would take a loss? So I would adjustment my basis down by $2642 (the amount of my deductible)?

Re: Rental property casualty loss due to fire and capital gains

ColeenD3 — Mon, 14 Mar 2022 11:11:44 GMT

Yes, just by the amount of the deductible, but only if you take the loss