Is my lawsuit settlement taxable? I received a settlement from a lawsuit filed against my former employer who did not honor a guaranteed buy out of my home in an employment relocation. The property has lost more than half it's value and may be foreclosed if we can't sell it by October. If the property sells, we will use the settlement to make up the difference in the sales price and the mortgage pay-off amount. The settlement agreement doesn't state specifically what the payment represents. The company admits no guilt and the statement is a blanket statement that covers anything that I could have sued for regarding the breach of contract.