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Posted by goshrx on February 14, 2007, 9:42 pm
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My taxes are generally very simple, but for 2006, there's
one quirk. I received an out-of-court settlement during 2006
of about $16,000. Long story short: I bought a older home a
few years ago. On the very day that the seller left the
home, I went to visit the house and discovered that the roof
leaked badly in more than one place. I ended up needing to
replace the roof. There were other serious problems with
the house, which cost me about $16,000 to get fixed.
Anyways, we settled out of court last year. I essentially
received the cost of the roof plus other items that needed
repairs--all were mentioned in the lawsuit.
How do I report this? I've heard differing viewpoints. It
seems that this shouldn't be taxable, as I am simply getting
my money back. Do I simply treat the money as a reduction
in the sale price (thus recognizing a larger gain when I
sell it)? Crazy....Thanks in advance! Interesting group!
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