Today TaxMama® hears from Craig in the TaxQuips Forum with this question. “In 2012 we received two class action settlements – one for our primary residence [~$3500]; and one for our rental [~$2700], both in the same development. These were for mold/painting deficiencies. The question is: are they taxable or non-taxable?
Did you use the money to make repairs?
Or did you make the repairs previously and were being reimbursed?
Either way, these funds are not income.
Put the information into the permanent file related to your home. The mold repairs that you made (or are making) get added to the cost (tax basis) of your home. These reimbursements will reduce the basis.
HOWEVER, if you get a 1099-MISC, be sure to report it on Line 21 of your tax return
AND deduct it out on the same line with a note: “See Statement Attached” and explain.
It’s not much money. But…it’s something.
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