Rent vs Sell Calculator
The house & the choice
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- United States — state and local practice
- Scope and limitations
- Educational estimate only. U.S. real estate costs are local: property tax rates, transfer and recording taxes, title practice, who customarily pays which closing cost, and landlord-tenant rules all change by state and often by county or city. Agent commission is negotiable and, since the 2024 NAR settlement, buyer-agent compensation is negotiated separately rather than assumed. Only a lender's Loan Estimate, a title company's fee sheet or a signed contract binds a number.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter what the home is worth, what you still owe, the rent it would fetch, and your current PITI payment.
- 02
Set how long you want to compare over.
- 03
Open Advanced options for your mortgage rate and remaining term, the operating expense share, and the growth and return assumptions.
- 04
Read which path leaves you ahead, and in which year holding pulls in front.
- 05
Note the exclusion deadline. It is the clock that makes this decision time-limited rather than open-ended.
Formula
The sell path starts with net proceeds — value less selling costs less the mortgage balance — and grows them at the investment return each year. The hold path amortises the existing mortgage month by month, and for each year takes the rent grown at the rent-growth rate, subtracts operating expenses as a share of it, subtracts twelve PITI payments, and adds the result to a cash pot that also earns the investment return. The pot may go negative, which is the honest answer for a rental that costs money to hold. The hold path's net worth in any year is the appreciated value, less selling costs, less the remaining balance, plus that pot — so both paths are measured as if liquidated on the same day. The crossover is the first year the hold path exceeds the sell path, reported as never reached when it does not happen inside the horizon.
Example
A $420,000 home with a $240,000 balance at 4.5% and 22 years left, renting for $2,400 against a $1,850 PITI payment, compared over ten years. Sell path: net proceeds are $420,000 − $33,600 selling costs − $240,000 = $146,400, invested at 7% for ten years, reaching $287,991. Hold path: the property appreciates at 3% to $564,000, selling costs take $45,000, the balance falls to about $155,000, and ten years of cash flow accumulate in the pot. Ending net worth: $367,373. Holding leaves you $79,382 ahead, and it pulls in front in year one. Two things drive that. The 4.5% mortgage produces real cash flow — $2,400 of rent against a $1,850 payment and 30% operating costs leaves about $70 a month at the start, growing as rent rises. And the tenant repays roughly $85,000 of principal over the decade. But note the deadline. The section 121 exclusion survives about three more years. If the home has appreciated substantially since you bought it, selling inside that window could be worth tens of thousands of tax-free dollars — enough to reverse this answer entirely. That is the trade this page exists to make visible.
Definitions
- Section 121 exclusion
- Up to $250,000 of home-sale gain tax-free, $500,000 jointly, if you lived there two of the last five years.
- Accidental landlord
- Someone renting out a former home rather than a property bought as an investment.
- Net proceeds
- Sale price less selling costs less the mortgage payoff. The capital the sell path starts with.
- PITI
- Principal, interest, taxes and insurance — the payment the rent has to cover.
- Crossover year
- The year the hold path's net worth overtakes the sell path's.
- Operating expense ratio
- Costs as a share of rent. Thirty to forty percent for a self-managed single family.
- Landlord policy
- Insurance for a tenant-occupied property. A homeowners policy generally will not cover one.
- Cash pot
- Accumulated rental cash flow, invested at the same return as the sell path so the comparison is fair.
- Non-qualified use
- Time the property was not your main residence, which reduces the exclusion proportionally.
- Depreciation recapture
- Tax at up to 25% on depreciation claimed while it was a rental. Excluded from this projection.
- Selling costs
- Commission, transfer tax and title. Applied at the end of the hold path as well as at the start of the sell path.
- Rate lock-in
- The effect of a below-market mortgage making a property worth keeping that would not be worth buying today.
Good to know
A low fixed rate is an asset you cannot buy back
The strongest argument for keeping a property is often the loan on it. A 4.5% mortgage in a 7% market is worth real money — the same balance financed today would cost hundreds more a month, and selling extinguishes that advantage permanently. This is the lock-in effect that has held US existing-home inventory low since rates rose, and it is a legitimate financial reason rather than a sentimental one. It also means the comparison is not between a house and an index fund. It is between a leveraged asset with cheap, fixed, non-callable debt and an unleveraged pot of cash. Over ten years here, keeping comes out $79,382 ahead — $367,373 against $287,991 — and a meaningful share of that gap is simply the rate.
The section 121 clock is the deadline that forces the decision
The capital gains exclusion requires two of the last five years as your main home. Once you move out, that window starts closing, and after three years of renting the property no longer qualifies — the exclusion is gone, and a gain that would have been entirely tax-free becomes taxable. On a long-held primary residence with substantial appreciation, that can be $250,000 or $500,000 of shelter forfeited, worth tens of thousands in tax. Three years is therefore not an arbitrary planning horizon; it is a statutory deadline, and any decision to rent rather than sell should be made with the date written down. Renting for two years and selling in the third preserves the exclusion. Renting for four and then deciding to sell does not, and no amount of subsequent planning restores it.
Negative cash flow at the start is normal and still a cost
Renting this property starts at about negative $170 a month once operating expenses at 30% of rent are taken. The reason holding still wins is that rent grows while a fixed payment does not, so the cash flow crosses into positive territory and the gap widens every year afterwards. That is a real dynamic and it comes with a real requirement: someone has to fund the shortfall in the early years, including in a month with a vacancy and a repair at the same time. The model here also assumes the rent is collected and the property is occupied. A single three-month vacancy costs more than a year of the modelled shortfall, which is why a landlord starting from negative cash flow needs reserves in a way that a landlord starting from positive does not.
Becoming a landlord is a job, and the model does not price your time
The arithmetic compares two portfolios; it does not compare two lives. Keeping the house means tenant screening, lease compliance, maintenance calls, turnovers, the eviction process if it comes to that, and a state landlord-tenant code you now need to know. Professional management costs 8% to 10% of rent plus a leasing fee, which would reverse a meaningful part of the advantage shown here. Doing it yourself costs time that has value. There is also a concentration question: keeping the house means a large share of net worth sits in one property in one neighbourhood, undiversified and illiquid, while selling and investing spreads it. Neither is wrong. But the $79,382 is the compensation for taking on the job and the concentration, and it should be read as a wage rather than as free money.
The middle options most people never price
Rent or sell is a false binary. A cash-out refinance takes equity out at today's rates while keeping the property, though it raises the payment and may push cash flow further negative. A home equity line does the same in a smaller, more flexible form and preserves the first mortgage's rate, which is often the better structure precisely because that rate is the asset. Selling to a family member on an installment note spreads the gain across years and keeps the income. A 1031 exchange converts the property into a different rental without triggering tax, though it requires the property to be an investment first and has strict deadlines. And renting for two years, then selling inside the section 121 window, captures much of the holding benefit while preserving the exclusion — the closest thing to having both.
Frequently asked questions
What is the deadline everyone talks about?
The section 121 exclusion needs you to have lived in the home two of the last five years. Once you have rented it out long enough to break that test, up to $250,000 of gain — $500,000 filing jointly — stops being tax-free. That gives you roughly three years of renting before the clock runs out.
Is my low mortgage rate a good enough reason to keep it?
It is the strongest single argument. A 3% or 4% mortgage cannot be replaced, and it makes the property cash flow in a way an identical house bought today would not. Selling gives that rate up permanently, and it is worth quantifying before deciding.
Why does the sell path assume I invest the proceeds?
Because otherwise the comparison is dishonest. Selling and leaving the money in a checking account is a choice, not the alternative. The invest-return field lets you set what the proceeds would actually earn — set it lower if the money is going toward a down payment rather than into the market.
What operating expense share should I use?
Thirty to forty percent of rent is realistic for a single-family rental once tax, insurance, maintenance, vacancy and reserves are counted — and higher if you use a manager. The default here is deliberately at the lower end because you already own it and know the property.
What does this leave out?
The tax on the sale in either path, the depreciation you would claim as a landlord and the recapture at the end, and the value of your own time. It also cannot price the risk of a bad tenant, which is the thing that actually ends most accidental-landlord experiments.
Am I ready to be a landlord?
The question the arithmetic cannot answer. It is a job with midnight phone calls, and a house you lived in is emotionally harder to run as a business than one you bought as one. If the answer is no, a positive projection does not change it.
Should I use a property manager?
If you are moving out of the area, almost certainly. Eight to ten percent of rent plus a placement fee is real money, but self-managing at a distance is how deferred maintenance becomes a large repair. Raise the operating expense share if you plan to use one.
What about depreciation while I rent it?
It is a genuine benefit this model excludes for simplicity — the deduction on a $420,000 home with an 80% building share is roughly $12,200 a year, saving $2,900 at a 24% rate. It also creates a recapture liability at up to 25% when you eventually sell.
Can I move back in later to reset the exclusion?
Partially. Moving back and living there two more years restores some of the exclusion, but periods of non-qualified use reduce it proportionally and depreciation taken is recaptured regardless. It is not a clean reset, and it is worth advice before relying on it.
What if the rent barely covers the mortgage?
Then you are betting entirely on appreciation and paydown, with no cushion for a vacancy or a repair. That can work over ten years and is uncomfortable over one. Check the cash flow figure in year one, not just the ending net worth.
Does converting to a rental affect my insurance?
Yes — a homeowners policy generally does not cover a tenant-occupied property, and you need a landlord policy, typically 15% to 25% more expensive. Failing to switch is a claim denied at the worst possible moment.
How sensitive is this to the appreciation assumption?
Very. Both paths grow, so it is the gap between the property's appreciation and the investment return that decides the answer. Run it with appreciation a point below the investment return and see whether the conclusion survives.