Cash settlement, tax implications

Quick rundown of my situation. I have a rental house, had a hail storm hit. Applied for insurance, insurance has agreed to cash settlement only. The rental is currently on the market for sale (divorce settlement). The cash settlement is for 77000. So my question is, do I have to do all the repairs? Can I just do some of them and retain the leftover money from the settlement? How will this work for my tax? There is no rental income included in tge payout. It is to repair the roof to the standard of which it previously was, so like for like. Is the payout assessable as income as it’s for repairs only? Thanks I’m advance

 

No. The assessable issue must consider the deductible. It falls under the assessable recoupmnet rules.

The amount of $77000 would come off the costbase if no repairs are made. This also works in part in proportion. eg 50% of quoted repairs are made. Then $35K is assessable, 100% of repairs (Approx $35K perhaps more) deductible. Then $35K comes off costbase