Settlement for house repair

[alexdiazlopez18]

I bought a house and there were some issues with the siding of the house that were not properly disclosed. It is part of an HOA and we got a Limited Common Assessment charge (from the HOA) to fix the house. We reached a settlement with the realtor that covered some of that LCA charge. Is that settlement money taxable? 

We are hoping that it isn't as it was spent solely to cover some of the cost we were charged to fix the house. Hoping to get an answer from someone that knows more than us about this.

[Mike9241 · Accepted solution]

unless you deducted the charge, the reimbursement would be non-taxable as long as it did not exceed the charge.  if the charge was substantial and you treated it properly as a capital improvement that adds to your tax basis in the home, then the reimbursement would reduce your basis.