Insurance reimbursement for lost rental income due to water damage

[DocNyr]

Dear community,

In 2019, I suffered a month's loss of rent due to water damage in the condo that I rent out to my tenant.

Thankfully, my rental dwelling insurance policy paid me for the lost month's rent while the property was being repaired. The insurance company sent me a form mentioning that it was being reported to the IRS as income. How do I report this payment from the insurance company on my tax return? At which point do I enter this income into turbo tax?  Do I enter it into the total rental income?

By the way, I am not talking about the insurance payment for repairs. The insurance company paid for repairs directly to the contractor and I never received any of those funds. 

Thanks for any help you can provide. 

[MarilynG1]

Since you received the insurance reimbursement for lost rental income, you would report it as Rental Income, since it basically replaced a month's rent for you.

Click this link for more info on Rental Insurance Reimbursement.

[DocNyr]

But the form that the insurance company sent me was a 2019 Miscellaneous Income form. I don'think there is a separate line in Schedule E to report this. In other words, do I combine the amount on the insurance company Misc income Form with the rental payments from my tenant and report that combined number as rental income on Schedule E?

[MarilynG1 · Accepted solution]

Yes, there is a place to enter Rental Income received on a 1099-Misc (screenshot), although adding it to your other Rental Income is okay, too.

[aldfld]

Simply report the insurance company reimbursement for rent as if the tenant had paid; i.e. as gross rental income in the year received. Any unreimbursed expenses (those not paid directly to the contractor but incurred by you) should be shown as rental expense in the year incurred (assuming you are on a cash basis).

If the insurance company has overpaid for your actual repairs, as often happens, that excess must be shown as a negative expense and included in your Schedule E in the year in which the claim was finalized.

[DocNyr]

The Insurance company that sent me the 1099 Misc inserted the amount of the lost rental income into "Box 3 Other Income" instead of rents!

What should I do in TurboTax please?

[DeanM15]

You should enter the 1099MISC as rent if that is what the insurance company is saying the payment is for. 

When you enter the rent in the Real Estate Rental section of Turbotax it will give you an option of entering all or partial 1099MISC. Choose what works for you and enter the 1099MISC into the program there.