Tax implications of new roof claim / settlement

[Kenneth Hynes]

BP Community  

I am researching how to handle my situation on my taxes. Background last year had some hail damage to one of my rental properties. PM looked at, called in estimator and said needed to repair / replace roof. Called insurance and they sent claims adjustor out there, said had to replace roof. Had the work down and filed a claim with my insurance company. In addition to the roof, there was some minor damage to other parts of the property (siding and painting) that I had handled as well. I received a settlement that covered the work on my roof minus my deductible ($750)

How do I handle this on my taxes? The new roof work was about 9.5 K and the other work was about 1500 or so, so the total invoice was ~ 11K, and I received a settlement from the insurance for $8800.

Reading IRS pubs 523 and 527 and previous forum posts, looks like I have to capitalize this expense. Is this this true even if I got a settlement? If I capitalize the new roof work, can I still deduct the other work as a current year expense? (I would assume so)

Do I capitalize the 9.5 K over 27.5 years as a separate deprecation or just add to the current cost basis of the house ?

If I capitalize, how do I handle / report the claim settlement of 8K? Is that reported as income ?

Thanks for any assistance or advice