Yes, there is another factor besides purchase price and selling price and that is DEPRECIATION.
When you sell a business asset, in this case the rental, the depreciation you claimed will need to be "recaptured" or paid back.
Basically you take the purchase price (or whatever your basis is) and subtract the depreciation. It doesn't even matter if you remembered to claim the depreciation yearly on your tax return, the IRS makes you recapture depreciation whether you claimed it or not.
Now this basis adjusted for deprecation is subtracted from your sale price. The gain attributed to depreciation is listed as ordinary (personal) income, the gain attributed to the increase in value is capital gain.
@ok4mee
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