Six years ago I attempted to buy a condo, but the seller tried to void the contract and would not release my earnest money. I decided to take him to court and since then I have bought another place and moved again. We finally settled the case this year. Part of the settlement was to release the property, but since I had no interest in actually purchasing the property I immediately (same closing) sold the property to another party which was all part of the deal. I netted just under $12,000 and never took possession of the property. How will I be taxed on this money? So far I have not received any tax documentation - only a settlement statement.
Answer:
Probably a short-term capital gain, but it could make a difference how the transaction was papered. Take the documents to your CPA for analysis.
Yes it is taxable
Yes if you repost it as income then they will take taxes out of it and at a rate of almost 30%
I'm not 100% sure, but it does sounds like you had a $12,000 taxable gain. Talk to a local tax preparer or CPA, but you might be able to deduct expenses like your legal fees incurred to get the settlement.
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