I had a second home that was destroyed due to a major flood. I was able to obtain insurance for the damage and I just sold the home and I'm wondering how do I report the gain on the home?

ANSWER

The BIDaWIZ Team's Answer:

The first step is to determine your adjusted basis in the home. Given that your home was destroyed, you will need to deduct a casualty loss on the home to the extent that it wasn't covered by an insurance reimbursement. Thus, you need to follow these steps to determine your adjusted basis: 1) subtract the amount of casualty loss you claimed from your basis and the insurance proceeds you received, then add-back the insurance proceeds and other funds you used to restore the property as well as any costs for removing the debris. Your capital gain or loss will be the difference between your adjusted basis and the sale price of the home. This would be reported on Schedule D and flow to your Form 1040.