tax liability regarding settlements that make you "whole"

[jeffreich]

What is the name of your state (only U.S. law)? California
I am currently in the process of trying to settle out of court on a fail to disclose matter regarding my house and the developer. Since I am the first owner I am planning to ask as a settlement to make me “whole” meaning for them to pay me back for my mortgage payments, property taxes and house insurance payments and I would sign over the title/deed to the house to them. Since I would not be asking to make a gain on this just to make me “whole”, if they were to agree, would the settlement amount be taxable? Thank you for your help in this matter.

 

[FlyingRon]

If you deducted any of the interest and taxes, their refund to you would be taxable. Otherwise not.

Good luck with your negotiations. Unless the property was uninhabitable, getting the interest and taxes would be way more than making you whole.