Arnie buys a house for $600,000. After a year he moves to a new state and rents out the house. At that time the house was worth $525,000. He recognizes income due to the rental of $65,000. He incurred $7,000 of real estate taxes, $22,000 mortgage interest expense, $15,000 of maintenance expense, and $7,500 of depreciation deductions. Arnie then sells the house for $450,000. What is the recognized loss/gain and character (ordinary vs capital) for tax purposes? Instead assume he sells the house for $638,000. 

What is the recognized loss/gain and character (ordinary vs capital) for tax purposes?