A seller trying to avoid Capital Gains tax

[shamrock]

We live in Indiana. We rented a house for about 18 months ($800 per month) in Indiana from a woman who had retired to Florida. After 18 months, we purchased a house and notified her that we would be moving in 60 days. This was right around tax time. Among other things she should not have done as a landlord, she then asked us not to claim the renter's deduction on our Indiana state taxes. She stated that she wanted to sell the house and would have to pay Capital Gains taxes, but that she wouldn't have to pay them if we didn't claim we had rented from her. She told us she would add $400 to our deposit return if we would do this for her. This seemed fishy to us. We did claim the renter's deduction because we had in the past and it was our right to do so. We rejected her offer and refused to help her try to squeeze one by the
Government. When we told her we didn't want to help her or be involved in any way, she said she was going to state that wasn't a rental property and do it anyway.

My husband and I would like to report this, but don't know if there's anything to report. We know she did sell the house. Did she do anything illegal? I certainly don't know the ins and outs but would like to see that she doesn't get away with it. Any info will help. Thanks.

 

[HomeGuru]

Do not go along with her scheme unless you want IRS and State tax agents knocking on your door.
So far, the only thing illegal she did was try to get you to commit fraud and aid and abet her.