About the Rent Out or Sell Calculator
Moving out of a home you own leaves a big decision: sell it now, or keep it and rent it out. This rent out or sell calculator puts both paths on the same footing. If you sell, it takes your net proceeds after selling costs and mortgage payoff and grows them at the investment return you choose. If you keep it, it adds up yearly rental cash flow (reinvested at the same return), appreciation and mortgage paydown, then subtracts selling costs and capital gains tax when you sell at the end of the period.
It is built for homeowners relocating for work, accidental landlords and anyone deciding whether their current house would make a good first rental. Enter today’s value and loan details, expected rent, vacancy and yearly costs, and your assumptions for appreciation, rent growth and investment returns.
Under the US Section 121 rules in effect for 2026, selling a main home you owned and lived in for two of the last five years can exclude up to $250,000 of gain ($500,000 for married couples filing jointly; these amounts are set in law and not indexed for inflation, per the latest IRS Publication 523 for 2025 returns), but renting it out for more than three years after moving out loses that exclusion. If you mark today’s sale as tax-free, the calculator also treats a later sale within three years as tax-free and taxes any later sale at your capital gains rate (this assumes you lived in the home for the two years right before moving out). Two costs of being a landlord are not modeled: income tax on yearly rental profit, and tax of up to 25% on depreciation recapture when you sell (depreciation taken after May 6, 1997 can never be excluded). Because both are left out, the keep-and-rent result is somewhat optimistic, so treat a narrow win for renting as a tie.
With the default inputs, the advantage of renting it out is $175,935.50. Change any value above to recalculate instantly.
How to use the rent out or sell calculator
- 1Enter the home’s value, your mortgage balance, rate and years remaining.
- 2Enter the expected rent, vacancy and yearly costs other than the mortgage.
- 3Set appreciation, rent growth and the return you could earn on invested cash.
- 4Enter your cost basis, capital gains rate and whether selling now is tax-free.
- 5Compare wealth under both paths and watch where the lines cross on the chart.
Formula and method
Selling now produces net proceeds of the home value V less selling costs s and the mortgage balance B (and tax, if the sale is not exempt). Those proceeds are assumed to be invested at return i for N years.
Keeping the home produces yearly cash flow CF_t = rent × 12 × (1 − vacancy) − yearly costs − mortgage payments, with rent and costs growing each year; each year’s cash flow is invested at the same return i (a negative cash flow reduces the pot). At the end the home is sold at the appreciated value, less selling costs, the remaining loan balance B_N from the amortization schedule, and capital gains tax on (net sale price − cost basis), unless the home-sale exclusion still applies because the sale is within three years of moving out. Depreciation recapture (taxed at up to 25%) and income tax on rental profit are ignored, which makes the keep option look somewhat better than it really is.
- V
- Current home value
- s
- Selling costs as a share of price
- i
- Return on invested cash
- a
- Annual appreciation
- B_N
- Mortgage balance after N years
Worked examples
$400k home renting for $2,500, 10-year comparison
Selling today nets $122,000, which grows to about $218,483 at 6%. Keeping the home yields about $305 a month of cash flow in year 1, and after 10 years of 3.5% appreciation and loan paydown the rental is worth about $394,419 after selling costs and $33,711 of capital gains tax — roughly $175,935 more.
Lower rent and appreciation, 8% investment return
At $2,000 rent the property loses about $170 a month in year 1, and 2% appreciation adds less equity. Investing the $122,000 proceeds at 8% grows to about $263,389, beating the rental’s $247,594, so selling wins by roughly $15,795.
Rent it for 3 years, then sell tax-free
Selling within three years of moving out still meets the two-of-five-year test, so no capital gains tax is assumed on the later sale. Three years of cash flow, 3.5% appreciation and loan paydown leave about $194,484, versus $145,304 from investing today’s $122,000 at 6%.
Frequently asked questions
Should I sell my house or rent it out?+
Keeping it tends to win when rent comfortably covers the mortgage and costs, your mortgage rate is low, and the area appreciates well. Selling tends to win when cash flow is negative, you need the equity, or you would lose a large tax-free home-sale exclusion.
Do I lose the $250,000 capital gains exclusion if I rent out my home?+
You can exclude up to $250,000 of gain ($500,000 married filing jointly) if you owned and lived in the home for at least two of the five years before the sale. Renting it out for more than three years after you move out breaks that test; a sale within three years can still qualify, although depreciation claimed while it was a rental is taxed.
What is depreciation recapture?+
While a home is a rental you must depreciate the building, and when you sell, that depreciation is taxed at up to 25% even if the rest of the gain is excluded. This calculator does not include recapture, so the keep option may look slightly better than reality.
What return should I assume on invested proceeds?+
Use a return that matches where the money would actually go: a high-yield savings rate for cash, or a conservative long-run assumption for a diversified stock and bond portfolio. Test several values, since the result is sensitive to it.
Can I get a new mortgage if I keep my old house as a rental?+
Often yes. Lenders usually count a portion of the expected rent — commonly 75% — toward your income when a lease is in place, but you still need enough income and reserves to carry both loans.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.