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Are my legal fees tax deductable?

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codderkate

Guest
During the past year, I had to pay legal fees to defend my purchase of another share in a 3-way split of shared land. After buying the share, which was turned down in writing by the third share-holder, that shareholder sold their house, land and share in the parcel to someone else and didn't disclose the change in ownership over the shared parcel. (I now own 2/3 to their 1/3) Their buyers balked and demanded that they be given a part of this third share before closing on the partner's home and original property. I not only had to hire an attorney to buy the share, but I was forced to pay legal fees to defend the purchase, because the third shareholder was lying to cover their non-disclosure to their buyers. Complicating the issue is the fact that they threatened me with a law suit if I caused the loss of their sale if I a: didn't rescind my purchase and b: give up my right of first purchase even though they offered it to their buyers before it was offered to me. None of these situations were created by me and are being resolved with buyers, but I have a large legal bill. My question is: Can I deduct any of these legal bills as a loss on my income taxes? I feel like I was victimized in this shady real estate deal...can I recoop any part of this loss in my taxes?

[Edited by codderkate on 01-14-2001 at 11:19 AM]
 


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Donald

Guest
deduct legal fees

If buying real estate is your profession, or the greatest share of your income is from buying and selling you can. If not these legal fees become but of your property cost
 
C

codderkate

Guest
Thanks for your reply

Can I infer from your response that it's possible to use this expense to defray capital gains if I ultimately sell the property?
 
D

Donald

Guest
Defray Capital Gains

Yes, but lets not use the word defray, instead this is a cost of doing business so these legal fees decreases your capital gains, which means you will pay less taxes.
 

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