Hi- I'm not sure if this should be in the real estate forum or tax forum...
I own a house in Worcester that was recently severely damaged by fire and I expect to soon pay someone to demolish it and then I will decide what to do with the land.
A public adjuster has been working with my insurance company and tells me that soon they will have reached an agreement re: the amount and then I can expect the release of the ACV (actual cash value) payment.
Friends have told me that I may have a certain number of days in which I need to use this payment or else I will have a higher tax liability.
Can you tell me if that is true?
If I make an offer on another property, would that be sufficient (for tax savings purposes) to consider the ACV as being set aside in my bank account while I wait to see if the offer is accepted?
If so, if the offer is quickly accepted, would the Closing need to take place within a certain number of days (after a House Inspection that is acceptable to me) in order for me to have the best tax advantage?
Would the ACV payment be at risk of higher taxes if my offer on a new property is not accepted or if my offer is accepted but I don't proceed with Closing due to a bad inspection report or for some other reason?
If buying another house is not a way to protect myself from a high tax burden due to the ACV payment, can you suggest any other options I could explore?
Thanks very much for any suggestions.
Donna