No. The loan payoff amount is not a factor to determine a gain or loss of an investment property, To calculate your gain, subtract the adjusted basis of your property at the time of sale from the sales price your rental property sold for, including sales expenses such as legal fees and sales commissions paid, and any depreciation recapture.
Your adjusted basis is generally your cost in acquiring your home plus the cost of any capital improvements you made, less casualty loss amounts and other decreases.
Depreciation recapture applies to the portion of the gain attributable to the depreciation deductions you’ve already taken. For example, your adjusted cost basis in the property after 10 years is $135,870 (the original cost basis of $210,000 less the $74,130 depreciation). If you sell for $300,000, you’ll recognize a gain of $164,130 ($300,000 minus $135,870).
