Rent vs. Sell Analyzer
Should you sell your property or rent it out? See the 10-year financial comparison with appreciation, tax implications, and a clear verdict.
10-Year Verdict
SELL
Selling now generates $69,874 more wealth over 10 years
Rent: 10-Year Wealth
$211,428
Sell: 10-Year Wealth
$281,303
Rent It Out
Keep as rental property
Monthly Cash Flow
-$325
Annual Cash Flow
-$3,903
Annual Tax Savings (Depreciation)
$3,273
$13,091/yr depreciation
10-Year Total Wealth
$211,428
Sell Now
Sell and reinvest proceeds
Net Proceeds After Tax
$143,000
Selling Costs
$27,000
6% of value
Capital Gains Tax
$0
$250k exclusion applied
10-Year Invested Wealth
$281,303
At 7% annual return
| Year | Rent Wealth | Sell Wealth | Winner |
|---|---|---|---|
| Year 1 | $17,493 | $153,010 | Sell |
| Year 2 | $35,700 | $163,721 | Sell |
| Year 3 | $54,655 | $175,181 | Sell |
| Year 4 | $74,392 | $187,444 | Sell |
| Year 5 | $94,948 | $200,565 | Sell |
| Year 6 | $116,361 | $214,604 | Sell |
| Year 7 | $138,671 | $229,627 | Sell |
| Year 8 | $161,922 | $245,701 | Sell |
| Year 9 | $186,159 | $262,900 | Sell |
| Year 10 | $211,428 | $281,303 | Sell |
Tax Implications to Consider
- Capital Gains Exclusion: If you've lived in the home 2+ of the last 5 years, you may exclude up to $250K (single) or $500K (married) of gains from taxes.
- Depreciation Recapture: If you rent and later sell, you'll owe taxes on accumulated depreciation at up to 25%, even if you sell at a loss.
- 1031 Exchange: If renting, you can eventually sell and defer all capital gains by exchanging into another investment property.
- Consult a CPA: Tax implications vary significantly by situation. This calculator provides estimates only.
Rent vs. Sell: Making the Right Decision
"Should I sell my house or rent it out?" is one of the most common — and most consequential — financial questions homeowners face. The answer isn't always obvious. It depends on your local market, your mortgage rate, potential rental income, tax situation, and personal goals. Our calculator models the full 10-year financial picture so you can make a data-driven decision, not an emotional one.
When Renting Makes Sense:
- Low mortgage rate lock: If you secured a rate below 4-5% during 2020-2022, selling means giving up that rate forever. As a rental, that low rate creates stronger cash flow margins.
- Positive cash flow: The property generates meaningful income after mortgage, taxes, insurance, vacancy, maintenance, and management. Use the 50% rule as a quick screen: if 50% of rent covers the mortgage, it likely cash flows.
- Appreciating market: If your area is growing (new jobs, infrastructure, population growth), holding the property captures future appreciation while earning income today.
- Tax benefits: Rental properties offer depreciation deductions ($7,272/year on a $200,000 home), mortgage interest deductions, and expense write-offs that can significantly reduce your tax bill.
- Portfolio building: Keeping the property starts or grows your rental portfolio. Combined with a DSCR loan for the next property, this can be the foundation of financial independence.
When Selling Makes Sense:
- Capital gains exclusion: If you've lived in the home 2+ of the last 5 years, you can exclude up to $250K (single) or $500K (married) of capital gains from taxes — a massive benefit you lose if you wait too long.
- Negative cash flow: If the property would lose money each month as a rental, you're effectively paying to be a landlord. Selling and investing the equity elsewhere may yield better returns.
- High equity, low yield: If you have $300K in equity in a property that generates $300/month cash flow, that's a 1.2% return on equity. You might earn more investing the proceeds in index funds or higher-yielding rentals.
- Lifestyle factors: Long-distance landlording, property management stress, or needing the equity for a new home purchase are all valid reasons to sell.
Tax Implications to Consider:
If You Sell Now:
- ✓ $250K/$500K capital gains exclusion (if eligible)
- ✓ No depreciation recapture tax
- ✓ Clean break — no ongoing tax complexity
- ✗ Lose future appreciation potential
If You Rent First, Sell Later:
- ✓ Annual depreciation deductions while renting
- ✓ Expense write-offs reduce taxable income
- ✗ May lose capital gains exclusion (2-of-5-year rule)
- ✗ Depreciation recapture tax at 25% when sold
- ✓ Can use 1031 exchange to defer all gains
Pro Tip: The "Rent for 3 Years, Then Decide" Strategy
If you've lived in your home for 2+ years, you have up to 3 years to sell and still claim the capital gains exclusion (you need 2 of the last 5 years). This gives you a window to rent the property, test the landlord experience, and see how the numbers play out in practice — while preserving your tax-free exit. If renting works, keep going. If it doesn't, sell within 3 years and take the exclusion. It's the best of both worlds.
Important: Hidden Costs of Renting
Don't just compare mortgage to rent. Factor in: property management (8-10% of rent), vacancy (5-8% of annual rent), maintenance and repairs (5-10% of rent), landlord insurance (higher than homeowner's), potential legal costs, and your time. A property that looks cash-flow positive on a napkin calculation may be breakeven or negative once all costs are included. Our calculator accounts for all of these — use it to see the real numbers.
Related Tools:
- Deal Analyzer — Score the rental potential of your property across 8 investor metrics.
- DSCR Calculator — Check if the property qualifies for DSCR financing as a rental.
- Portfolio Builder — If you keep it, see how this property fits into a larger rental portfolio plan.
- Home Equity Calculator — See how much equity you have and how it grows over time.
Thinking About Renting It Out?
If the numbers favor renting, you may need to refinance into a DSCR investment property loan — especially if you want to buy a new primary residence. We can help you make the transition smoothly with no income docs required.