A home owner sues a real estate company for being involved in some shady practice which the end result is the home owner needs a new septic system installed and legal fee reimbursement, and the real estate company wants to settle out or court. The real estate company is going to pay lump sum that will cover the new installation of a septic system and legal fees. What does the home owner due for tax purposes? The home owner is not making any profit.
1 Answer from Attorneys
The general rule is that if you are compensated for an injury to or damage to the property, you are not earning income.
For example, if you bought a house for $200,000 and because of a fault with the builder or home seller it was only 95% of what you bargained for, when they FIX the remaining 5% they are only giving you what you already bought and already paid for.
So they are simply restoring what you already bought when you bought the house .
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
