Taxation For Insurance Claims Kept Instead Of Used To Repair Property

[Bryan Hancock]

So...if one receives a large insurance claim and decides to pocket it initially to pay off a mortgage and later does the property repairs what are the tax consequences? Using the dollars to pay off the mortgage initially will improve cash flow and then the excess cash flow could be used to make the needed repairs over time.

Does this become ordinary income? Thoughts? Ideas? Is there a way to avoid some taxes if the intent is to defer repairs?