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.

Tax Glossary

Imputed interest

Interest deemed earned on seller-financed sales or low-interest loans, where the parties’ stated interest rate is below the applicable IRS federal rate.

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