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Level 2

Question

Lawsuit settlement for termite damages

Forum|Forum|3 years ago
January 22, 2023
2 replies
5 views

Hi, I live in NJ and sued my home inspector for not disclosing termite treatment since I paid separately for a termite treatment inspection. His insurance settled for $10k is that reportable income to me the home owner?

Level 15

IRS pub 4345

Loss-in-value of property
‧ Property settlements for loss in value of property that are less than the adjusted basis of your
property are not taxable and generally do not need to be reported on your tax return. However, you
must reduce your basis in the property by the amount of the settlement. ‧ If the property settlement exceeds your adjusted basis in the property, the excess is income.

* in my opinion you would first offset the cost to repair the damage by the proceeds and only any excess proceeds would reduce your basis.

Mike9241

NazlaAuthor

Level 2

Thank you.