First off. Get some therapy. You need help.The point is that if it’s not “making money,” then you wouldn’t need to pay cap gains or an exclusion.
Second. Your own examples demonstrate you had no idea what the exclusions even were. You should have researched it. Banker even gave you the financial statement which renders your entire premise of debating his "cap gains/unrealized gain"...pointless.
Here is the financial statement:
Before
Assets:
House - $400,000
Liabilities:
Mortgage - $0
Net Worth - $400,000
After
Assets:
House -$330,000
Cash - $70,000
Liabilities:
Mortgage - $0
Net Worth - $400,000
married people filing a joint return can exclude up to $500,000 of the gain