The Constitution Ave rental property originally purchased May 22, 2015, for $185,000, including land value of $20,000; original mortgage $166,500, 5.75%, 30-year fixed.

3. Assume, for purposes of this question only, that the Andersons will sell 729 Constitution Ave for $325,000 on December 31, 2023. Sales expenses involved a real estate commission of $19,500. Use the depreciation calculated in question 1 of this assignment. Evaluate the sale of the property to determine the amount and the nature, or character, of the gain or loss.