Rental Property Insurance Payout and Tax Questions

[Nicole Bryan]

Hello team,

I have a rental property that burned down to the ground recently. Adjuster called this morning saying that he was going to request a payout for the 200K cash value. I owe about 125K (mortgage, demolition work, etc) so stand to have 75K left after everything is taken care of. 

My question is - will this 75K be taxed? If so, how much of it, what are the implications, etc...

If helpful, I put about 25 to 30K to purchase it and have spent 10-15K on it so that's 40-45K out of the total 75K.

Thanks so much.