Are losses on a home purchase deductible?
June 15, 2005
Date: Fri, 20 May 2005
My husband and I are in the middle of mediating a lawsuit over a home purchase. The home was fraudulently misrepresented and has many structural defects. We are suing for compensatory damages for the amount of $110,000.
Will we be taxed on this amount, since it represents a loss we have suffered on our investment? The lawsuit also calls for recission of the contract, or a buy back of the home.
Date: Mon, 06 June 2005
Amounts paid for legal judgments other than for physical personal injuries are taxable income.
Expenses for a personal residence are not deductible. A loss for the sale of a personal residence is not deductible.
We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.
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