Submitted By: someone
Answered: August 19, 2014 8:30 am

I received a $2,900 homeowner relocation assistance payment under HAFA. Is this taxable to me?

The IRS has yet to rule on the tax treatment of relocation payments under the Home Affordable Foreclosure Alternatives (HAFA) program, and some people in your situation have received a Form 1099-A or C. However, there is a good argument to be made that the payment is tax free. Government payments made to promote the general welfare are not taxed. However, if you use the payment for moving expenses, you can’t exclude the income and take a moving expense deduction. Talk to your tax advisor.

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Tax Glossary

Holding period

The length of time that an asset is owned and that generally determines long- or short-term capital gain treatment.

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