I have a rental property and I have received an insurance payout due to a burst water pipe damaging the cupboard.
If I do not claim the repairs to the cupboard. Is this payout a part of the taxable income for the property?
As in the past I have had an insurance payout for a car being written off and did not have to add the payout to my income for the year.
Any insurance payouts as a result of damage to your rental property are assessable as income. This could include compensation for loss of rent, damage, and repairs. So, if your insurer has paid you for the cost to repair or replace the damaged cupboard then you need to include this in the income for the rental property for the year. You are also able to claim as an expense the costs paid out to repair the cupboard. If you don't repair the cupboard then you still need to include the insurance payout as income but you won't have a matching deduction.
This is different to a car insurance payout which is usually not assessable income because the car is personal asset that isn't revenue generating.
ATO guidelines. Even mentions insurance payout for a burst pipe.
Rental income you must declare | Australian Taxation Office
Thank you all for your help
Dave
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