Apartment deposit tax deductable

[mrca]

Hi

I am a non-resident alien that moved to the US in September last year. I am completing my taxes and have a question about my first apartment deposit. We moved into the apartment under false pretenses and had to sue the landlords to get out of our lease. We were suing mainly for the homophobic abuse we were receiving even though they assured us that it would not happen. The case was settled before court but they kept our deposit. Someone has said that it might be deductible but I am unsure. Any advise would be great.

Thanks
Chris

 

[tranquility]

I see no way a settlement where they kept the deposit would result in a deduction.

 

[CSO286]

Hi

I am a non-resident alien that moved to the US in September last year. I am completing my taxes and have a question about my first apartment deposit. We moved into the apartment under false pretenses and had to sue the landlords to get out of our lease. We were suing mainly for the homophobic abuse we were receiving even though they assured us that it would not happen. The case was settled before court but they kept our deposit. Someone has said that it might be deductible but I am unsure. Any advise would be great.

Thanks
Chris

Why would it be tax deductible????

ETA: Why do YOU think it would be tax deductible?

 

[swalsh411]

Unless it's specified in the IRS code as deductible, it's not deductible. You're not going to find a law that says it's NOT deductible since that's not the way the tax code is written.

 

[davew128]

Unless it's specified in the IRS code as deductible, it's not deductible. You're not going to find a law that says it's NOT deductible since that's not the way the tax code is written.

Actually that's not true. The code is written in a way that specifies how an expense is or is not deductible. Almost any kind of expense could be deductible under the right fact pattern unless specifically prohibited by the code.

 

[tranquility]

Actually that's not true. The code is written in a way that specifies how an expense is or is not deductible. Almost any kind of expense could be deductible under the right fact pattern unless specifically prohibited by the code.

For example, this could have been a business/non-business bad debt, IF it had not been negotiated away in a settlement.

 

[davew128]

For example, this could have been a business/non-business bad debt, IF it had not been negotiated away in a settlement.

Or a theft/casualty loss as well.

 

[tranquility]

Theft? Hmmm....I suppose. Some states may make it a crime to not return the deposit. But, I don't know I'd want to try that one.

 

[LdiJ]

Actually that's not true. The code is written in a way that specifies how an expense is or is not deductible. Almost any kind of expense could be deductible under the right fact pattern unless specifically prohibited by the code.

While I don't disagree I think that the way that you have worded that is a bit misleading. Many different kinds of expenses could be deductible if the right set of facts exists. However, that does not make a security deposit for a rental unit deductible.

 

[tranquility]

While I don't disagree I think that the way that you have worded that is a bit misleading. Many different kinds of expenses could be deductible if the right set of facts exists. However, that does not make a security deposit for a rental unit deductible.

What if the landlord loses the house in foreclosure and disappears or declares bankruptcy? What if some part of the rental unit was used for business?

(With pedantry regarding "expenses" and "deductible".)

 

[davew128]

However, that does not make a security deposit for a rental unit deductible.

The security deposit itself is never deductible because the item is an asset and not an expense. The failure to return the deposit upon vacating the property depending on the circumstances is what would make that amount deductible.