Rental property fire question

Forum|Forum|5 years ago
July 10, 2020
1 reply
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Hi - If I stopped renting my property in June because there was a fire and they had to rebuild the home, do I put in my taxes I stopped using it as a rental property in June? Although, I did receive rental property losses from the insurance from June till the end of the year, so would it still be considered a rental for all 365 days or not?

Carl11_2

Employee

To save us both time, since the tax filing deadline is approaching, please download and read the attached word document. I wrote this document about 3 years ago. So if you suspect something may be outdated due to tax law changes then by all means, please question me about it.

bgray052299

Thank you Carl for the helpful document. If the structure burned down, we received insurance payment and then sold the land, where do I report the sale of the land? Is it okay to add in the unclaimed depreciation of the structure into the cost basis of the land for the purpose of the sale? If so the sale will show a significant loss which will hopefully offset the gains of the insurance payout vs the structure cost basis. Thank You!

DianeW777

No you cannot add the unclaimed depreciation from the structure to the land. The reason is because it is part of the cost basis being used to determine your overall casualty gain or loss due to insurance proceeds.

The land should have had a portion of the cost of the entire property when it was first placed on the depreciation schedule. You can use that amount if you actually set aside a land value at the time.

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