loss of rental and malicious damage insurance payout

looking at filling out my tax return and had some insurance claims made
Just wondering, where do i put the insurance payout for loss of rental and malicious damage ? and also where do i put the repairs associated with the property due to tenant damage ?
thanks in advance

 

In the shoe box with all of the paperwork which goes to @Liarliar''s accountant.

Rent is income, the damage is R&M under insurance so you won't have a nett cost against the repairs.

Disclaimer: I've got 10 fingers & 10 toes but I'm not an accountant.

 

Just think of it as two columns - money in and money out.

Money you receive from the insurance is income.

Money spent on repairs is claimed under deductions.
Marg

 

So that means if I received $25,000 of insurance money to cover my $25,000 of repairs, I will show the $25,000 in rental income or other related rental income, and then $25,000 in repairs. With the overall net result of zero.

 

Exactly!

Even though they cancel each other out, when you sign your tax return you declare that you have made full disclosure of income, so you can't leave anything out.

The exception would be if the insurance company organised and paid directly for the repairs and you never actually received any money.
Marg

 

Depends on the nature of the claim etc

If the insurer reinstated the damaged property then whether it was $10K or $1k wont matter as they paid to make good. The amount paid is capital in nature for the building and a replacement not a repair. If they paid you to compensate for repairs to make good and waste removal etc then yes the assessable sum may offset your costs. But you cant just say well it was $25K of repairs the insurer paid and claim that.

If they paid you for lost rent thats rental income. You wont have any extra costs against that eg excess isnt a cost. Shortfall isnt claimable. Tribunal and legals may be deductible. But if bond is retained that will also be income

In the simple scenario of loss of rent + malicious damage and you arranged the repairs then show income as income and costs of REPAIRS as deductible. Just watch for capital expenditure. eg The insurer paid for new oven. New oven must be depreciated. Old one may be written off if it can.

You may want your QS report updated for the new work ! For example $25k of new building works may attract an ongoing $625pa deduction under Div 43. They may be able to identify former Div 43 costs capable of being scrapped ?

 

Here is why you dont call the $25k income and claim $25K of costs.

Imagine what may happen if the property was destroyed. Its not assessable. The amount received compensates for loss or destruction of an asset. The insurer payout would be a capital receipt. Not income. Similar principle applies to reinstatement.

ATO ID 2011/82 - Assessable income: recoupments - insurance proceeds for destruction of capital works

Its not income if its reinstatement / indemnity cover. ie indemnity means the insurer pays your specific costs to make good. Reinstatement means they do the work.