Tax treatment of insurance claims
Looking for a little advice on this. I have a few sfh rentals. One of them had some significant damage done to it in Feb. of this year. To make a long story short I evicted a tenant and two days later someone kicked in the back door and removed the furnace. They left the back door open and it was about 3 degrees that day, pipes burst all over (was PVC) and the entire house was a disaster area. After what was the worst hour of my life walking around the place I made a police report and called my insurance company. Total damage 18k counting the stolen furnace and the 600 dollar water bill I got among other things. Some questions: I believe that I don't include insurance payments as income and also do not write off the money I paid back out, but what about items such as the furnace? Do I add the new furnace to a depreciation table? Any other insights?