If you sell a home the tax consequences depend on whether or not it was your primary residence.
First, you take the sales price and then subtract what you originally paid for the house. Then you also subtract any major improvements and the cost of the sale. What's left is the profit on the sale and that is taxable.
UNLESS the house was your primary residence. Then you also get to subtract a $250,000 credit ($500,000 if you're married) in order to get to the taxable amount. If you made less than a $250,000 profit it's tax free.
Renting a house is starting a business. You will keep track of all of your expenses related to renting (taxes and insurance and repairs, etc) and keep track of how much you make in rent. You will also learn about depreciation, which further reduces your income.
At the end of the year you will add up all of the rent you received, subtract all of the expenses that you had, and pay tax on the profits. If you had a loss you may be able to deduct it. But if you make a lot of money you may not.
@minesh-bhula
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