Rental disaster

[JJStephens]

This is a disaster in more ways than one.

Client owns a rental house in a another state. A car (uninsured) crashed into the house.

The main repair was to remove & replace the front exterior wall and one interior wall (including doors and windows) and to stabilize the roof. Cost to repair was $16,351 of which $11,614 was paid by client's insurance. His out-of-pocket was $4737.

Expense or capitalize? My instinct is to expense it (did not extend the life or increase the value).

[Guest Taxed]

That is a casualty loss. I would expense 4737. The facts surrounding this case is totally different than a rotting 30 year old roof decaying by course of nature. But for the accident there would be no need to do the repairs.

[mrichman333]



^{How to report.}

^{"If you had a casualty or theft that involved property used in your rental activ-ity, figure the net gain or loss in Section B of Form 4684, Casualties and Thefts. Follow the Instructions for Form 4684 for where to carry your net gain or loss."}

[ILLMAS]

Just wondering in the 4K he paid, was the deductible included? And for others how would the deductible be accounted for or not?

[kcjenkins]

It's expensed. Does not matter how much the 'deductible' was, that's just a name for the amount of risk you chose to assume yourself.