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Settlement

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jinj

Junior Member
New York

My landlord wanted to demolish the building I was living in so that he could build a high rise apartment building. We agreed on an amount which I then used towards a down payment for my current apartment. Do I need to pay tax on this amount and if so, where do I report it?
 


LdiJ

Senior Member
jinj said:
New York

My landlord wanted to demolish the building I was living in so that he could build a high rise apartment building. We agreed on an amount which I then used towards a down payment for my current apartment. Do I need to pay tax on this amount and if so, where do I report it?
Did you have any ownership interest in your previous apartment?
 

jinj

Junior Member
New York

No I didn't. It was just a rental. Basically he bought my rights as a tenant so that he didn't have to give me a new lease since it was a rent stabilized apartment.
 
Last edited:

LdiJ

Senior Member
jinj said:
New York

No I didn't. It was just a rental. Basically he bought my rights as a tenant so that he didn't have to give me a new lease since it was a rent stabilized apartment.
Sounds to me like it qualifies as income. However, I would like to see what opinions other's might have.
 

abezon

Senior Member
From pub 544:

"Cancellation of a lease. Payments received by a tenant for the cancellation of a lease are treated as an amount realized from the sale of property. Payments received by a landlord (lessor) for the cancellation of a lease are essentially a substitute for rental payments and are taxed as ordinary income in the year in which they are received."

Report the sale on Sch.D.
 

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