Are taxes payable on cash received for settlement disputes? Our builder is compensating for plumbing leak.?

1 ⤊

Are taxes payable on cash received for settlement disputes? Our builder is compensating for plumbing leak.?

Our brand new home had a plumbing leak and damaged carpets, stained furniture. The builder is compensating us for damages but the letter refers to it as "Settlement amount" rather than a reimbursement for damages. Will this become taxable?

2007-11-27 09:00:27 · 2 answers · asked by seeker 1 in Business & Finance ➔ Taxes ➔ Other - Taxes

2 answers

No, as it only makes you whole again. Keep records of the whole thing in case any questions are asked.

2007-11-27 09:49:57 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 1⤋

No, it's not taxable as long as you're not being paid more than the cost of repairing the damage.

2007-11-27 17:49:59 · answer #2 · answered by Knightly 2 · 1⤊ 0⤋