When selling real estate and computing capital gains, is the realized amount the check you get at the closing which is after mortgage payoff? Or the sale price?

[JasonSenior]

In other words, when computing your profit on the sale, does the mortgage payoff count as a reduction in the sales price?

[DoninGA · Accepted solution]

No, the mortgage payoff is not part of the calculation for a gain or loss on the sale.

Gain or Loss = Sales Price minus Sales Expenses minus Adjusted Basis (Purchase Price plus the cost of improvements prior to the sale)

[VolvoGirl · Accepted solution]

No, the mortgage and proceeds you get does not figure into it.  Your net profit is Sales price minus cost/purchase.