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Can I get an extension to the 2 year time limit for reinvestment of insurance payoff of rental property damaged by tornado.

Forum|Forum|7 years ago
June 3, 2019
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3 bedroom 2 bath rental property heavily damaged by tornado 27 December 2015. Insurance "totaled" said property and paid out complete amount. Property was rebuilt and rented in 18 months for about 60% of insurance payout. Remainder of funds are being used to build another investment property but will not be complete by end of 2017. Can I get an extension in the 2yr time limit to reinvest/spend the remainder of the funds

Best answer by Critter

Read the rules on page 12 : https://www.irs.gov/pub/irs-pdf/p547.pdf

CritterAnswer

Employee

Read the rules on page 12 : https://www.irs.gov/pub/irs-pdf/p547.pdf

D

dcara55135Author

Thanks for the reference! I copied the example below from your referenced link. My interpretation is that since the insurance did not settle my claim until the end of January 2016 my replacement period is December 31st 2018 . Is that how you would interpret this situation?

Example:
You are a calendar year taxpayer. While you were on vacation, a valuable piece of antique furniture that cost $2,200 was stolen from your home. You discovered the theft when you returned home on July 7, 2016. Your insurance company investigated the theft and didn't settle your claim until January 22, 2017, when they paid you $3,000. You first realized a gain from the reimbursement for the theft during 2017, so you have until December 31, 2019 to replace the property.