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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15738
Experience:  15years with H & R Block. Divisional leader, Instructor
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I am in the process of negotiating a "buy out" of my NYC

Customer Question

I am in the process of negotiating a "buy out" of my NYC rent stabilized lease, this amount could be as much as $25,000. I am also trying to qualify for a low income housing program in SF that has income limitations. My tenant attorney said that if I win the "buy out settlement", I can keep the money in escrow with his law firm. I'm wondering how (and the timeline) this "settlement" would impact my income. I would like to know how I can handle this in a way that delays my having to report this as income, and how the IRS would process this, and if I kept it in escrow then would I have to pay taxes on it when it's deposited or withdrawn? Thank you.
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.


As this is your personal residence it would not matter if the attorney hangs on to the settlement or you bank it till you move, it does not qualify for any reduction based on your getting into another rent program.

The buyout can be capital gain instead of ordinary so that is good for you. The long term capital rates are lower than ordinary income rates.

A lease for a rent-stabilized apartment is a contract, and any profits from the sale of a contracts are recognized as capital gains.

You will report this in the year the buyout happens.

Please remember to rate my service excellent once you have all the information you need. If you have any other questions, please ask me – I’ll be happy to respond. Thank you!

Expert:  Robin D. replied 1 year ago.

I hope that was useful

Expert:  Robin D. replied 1 year ago.

Checking to see if you responded