Do I have to pay income taxes on money paid out to payoff judgement leins after sale of property?
I am about to close on some property that I inherited from my father. My probate lawyer didn't do a title search before the property went into my name and it turns out there were several judgement leins against it from a previous lawyer. I found a buyer and when the title company did a title search these leins came up. I worked out deals with the leinholders to be paid off at the closing. The sale aount is $30,000 after the liens title company and back taxes are paid I'll be getting about $7000 to $8000. My question is this...
Next year am I paying income to the IRS for $7000 (Which is the actual income I'd be getting) or $30000? Mind you, those original liens didn't belong to me.
Joe,
This is most certainly a question for a CPA. I have my hunch about this one, but we can not give folks tax or legal advice. You are best-served speaking with your accounting and/or financial professionals.
Best of luck to you.
Derek Bauer, Associate Broker / Realtor
Real Estate One
Derek@DoorToDreams.com
That is a tax questions that I would address to your tax adviser. This site is mostly frequented by Realtors and lenders, not accountants.
Good luck!
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