What is the name of your state (only U.S. law)? Michigan
Gave a $50K down payment to developer, pre-construction in 2006. Contract stated unit must be delivered by 6/31/07. Unit was not delivered, but developer claimed "act of god" caused delays. Remedy in contract was to go to binding arbitration. After months of legal bills, finally went to arbitration and arbitrators found in my favor....developer had to return my $50K down payment and I did not have to proceed with puchase (market value had fallen drastically). Developer did indeed return my $50K in August, 2008. So, the deal is over and I recovered my down payment, but lawyers fees totalled about $13K and arbitration fees totalled $12K, all in 2008. Is there any way I can deduct the $25K in expenses for lawyers/arbitration on my 2008 taxes? Would it matter if I was planning on buying the unit as rental property, rather than as my personal residense?