Rental house got trashed by renter. Insurance covered all damage/losses (minus deductible) but I put in lots of sweat equity to repair the house, thus did not spend all of the insurance money paid to me. Made many other improvements that insurance did not pay for. Sold house after rehab. House is 60 miles away from me, so I incurred a lot of miles. Do I deduct the costs of the additional improvements (that insurance did not pay) from the sales price? Can I deduct the mileage that I incurred? How do I handle the excess paid to me from the insurance company (over the actual costs to restore the damage with sweat equity)?
The insurance proceeds made you whole again. Since the payment did not put you in a better overall financial position with your assets (your property value was decreased by the tenants so the reimbursement put you back to where you were before the damage) this is not taxable income.
The additional improvements that you made would be added to the cost basis of the house. So, yes, when you enter the sale, you will include this in the cost basis which will decrease your profit.
Yes, you can deduct the mileage for travel back and forth to your rental property. After you enter your rental income, you will come to the expense section and be able to enter expenses such as mileage.
When you are in the asset section of the rental area of TurboTax, you will mark that you stopped using the house and the improvements, then TurboTax will walk you through the sale and expenses.