What is condemned property?
Condemned property is property that was closed, seized, or restricted use for public purposes. For example, if the government is building new public buildings, they may condemn or seize your property. In return, the government is suppose to compensate the taxpayer or provide a replacement.
Condemned property is an example of involuntary property conversion and may have certain tax implications for the taxpayer. This is often referred to as “eminent domain”.
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What is an involuntary property conversion?
An involuntary conversion occurs when a taxpayer’s property is destroyed, stolen, condemned, or disposed of under the thread of condemnation and you receive other property or money in payment, such as insurance or a condemnation award. Involuntary conversions are also called involuntary exchanges. Nonrecognition treatment is offered for involuntary conversions assuming that the taxpayer will […]