Can I Deduct Any Expenses During a Reconstruction Project?

[Margaret Feit]

I had a property that burned down in a wildfire last week. I will have an insurance payout, which I will use to rebuild. For tax purposes, here is my general understanding:

The land value on my books will be unchanged. The existing basis that I had in the building will be reduced to $0 as a loss (there's nothing left). Insurance money will essentially be "income" against this loss, bringing me to an overall gain. But this gain can be deferred for a couple of years while I rebuild. When the new building is complete, all the costs to build it will become my new basis, minus the gain deferred from the insurance payout. Does this all sound right so far?

Here is my question: There will be a number of costs incurred on the property during this reconstruction time that are normally deductions I can expense and are not specifically related to the rebuild. These would be things like property tax, mortgage interest (I'm keeping the existing loan on the property), insurance premiums, HOA fees, etc. Also items like travel and mileage costs to visit the property during the construction. Are these expenses deductible in the current year when they are incurred, even though the property is not presently listed to rent? Or do they all get wrapped into the basis of the new build, along with the construction costs, when it is complete?

One additional note is that a portion of my insurance payout will be designated as coverage for lost income. My understanding for tax purposes is that even if I actually use these funds to help cover construction costs, I need to claim this portion of the payout as income in the year it's received and pay tax on it accordingly, instead of including it in the deferred gain that goes toward my basis. Does the fact that I will have this income on the property during the reconstruction process have any bearing on whether or not I can deduct the types of expenses in the paragraph above?

Thanks for any knowledge or direction anyone has to offer.