return of deposit and/or insurance pay out

[petergibbinson]

If a let property is damaged during a tenancy and part or all of the deposit withheld by the landlord, do you treat the deposit as income and the cost of repairs resulting as expenses as normal? Similarly if there is an insurance payout for damage (in this instance water damage) do you include that as income, and the cost of repairs as expenses and report on the tax return as for normal income/expenses? (the return of deposit and insurance payout are unrelated properties and instances)
Or do you merely net those specific costs and the insurance payout (or depsoit return/withheld), and only record any excess expenses/costs on the tax return (your net expense should solely be the excess for the insurance policy for expample) ... I realise the resulting tax effect is the same, but from a records/ tax return perspective what is the correct approach?

[pawncob]

The amount claimable is the excess costs after deducting insurance monies received.
Insurance is designed to put you in the same position as if the event had not occurred.

Security deposits are not the same. Amounts not refunded to tenants may be shown as income and the full costs of repairs claimed as an expense.

[petergibbinson]

Thankyou. So the net cost will be the insurance excess, I will put that as an expense on the relevant tax return.