The condemnation award is the money you are paid, or the value of the property you receive from the government or other condemning authority for your property, or the amount you receive on a sale of disposal of your property when it is under the threat of condemnation.
Payment of Debts
If you have debts outstanding on the property that is being condemned, such as a mortgage loan or real estate taxes, the amount of liabilities that are paid for you are considered part of the condemnation award.
Payments to Relocate
If you receive payments to relocate because you have been displaced from your home, place of business, or farm as part of a federally assisted program, these payments are not considered part of the condemnation award, and do not have to be included in your taxable income. If you receive federal assistance to buy replacement housing, the payments you made to buy replacement housing are included in your cost basis of the property.