Rental Sale

[msidler1]

I sold a rental property that had a remaining mortgage that was paid off using the sale proceeds. Is the mortgage balance considered an expense. If the sale was 425000 and mortgage was 125000 is the true sale 300000?

[tagteam]

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@msidler1 wrote:

Is the mortgage balance considered an expense. If the sale was 425000 and mortgage was 125000 is the true sale 300000?

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No. In that instance, your gross proceeds would be $425,000.

The mortgage balance does not factor into the gain/loss equation. 

You subtract your adjusted basis (typically cost plus improvements) from the gross proceeds (less selling expenses which do not include any mortgage balance) to arrive at your gain or loss on the sale.

[msidler1 · Accepted solution]

Thank you.