I bought a house in 1999, lived in it for three years, and then rented it until 2018. I sold it for the for the balance of the loan in 2018. Do I file the difference amt?

[paleorob68]

I bought a house in 1999 for $48,500. I lived in it for 3 years. I rented it out until 2018. I sold it in 2018 for the mortgage loan balance of $50,290. Do I have to file a profit between the 1999 price and the mortgage loan price?

[Coleen3]

Yes. The profit is based on the difference between the purchase price and sales price, which in your case is the mortgage loan price. A mortgage would typically have nothing to do with profit on the sale.

There are other factors. You can add the cost of improvements (as long as they have not already been taken on Schedule E, settlement cost at purchase and closing costs at sale to the basis to reduce your gain.  You will also have to recapture any depreciation taken.