We have sinkhole activity on our property. The repair cost estimates were for more than we were insured for and more than we owed on our mortgage so the insurance company sent us a check for our limit and said we had the option to try and get it fixed or pay off our mortgage. We sent the check to the mortgage company and opted for the pay off. They in return sent us the difference after the mortgage was paid off and told us it was up to us if we wanted to try and get the areas fixed now with the difference and out of our own pocket if we so chose. Is this considered taxable income?
tax question
Apr 14, 2009
2 Replies
To me, it sounds as if you overpaid your mortgage, so no, it's not taxable but merely a return of your overpayment (that you could not deduct).
NO, Insurance proceeds from hazard insurance are rarely taxable.
I suggest you start a thread about this at alt.home.repair. I have always gotten excellent advice there.
Dick
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