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You don't put the mortgage payoff anywhere. It does not affect your tax return.
If you paid off the mortgage before the end of the year, you will have paid less mortgage interest on that house. That will be reflected in the amount of interest shown on the Form 1098 that you get from the lender.
And what you did with the proceeds from the sale don't matter. Like payoff a mortgage. You just report the sale as Sales Price - Cost plus improvements.
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