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.
IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised
that any written tax advice contained on this website was
not written or intended to be used (and cannot be used) by any
taxpayer for the purpose of avoiding penalties that may be
imposed under the U.S. Internal Revenue Code.