Keep the house and rent it — or sell and invest?
You're moving. You can walk away with cash today, or become a landlord. We model both futures over the same horizon — including the tax trap most rental calculators hide.
Your situation
Have you lived here 2 of the last 5 years?
Filing status
Over 10 yrs
Selling likely leaves you ~$64,135 ahead.
Rent path: $245,298 · Sell path: $309,433
Where the rent path ends up
⚠ Heads up: renting could cost you a tax break
You currently qualify to exclude up to $500,000 of profit when you sell (IRS Section 121). Renting for more than about 3 years forfeits that exclusion. On an estimated future gain of $322,233, that's roughly $48,335 in capital gains tax you wouldn't otherwise owe. Depreciation recapture would add more. Estimate only — talk to a CPA.
Side by side
Monthly cash flow (year 1)
You'd be paying about $1,274/month out of pocket to hold this property.
What would flip this?
If rent were +$404 ($3,604/mo), renting would come out ahead.
What most rental calculators leave out
Being a landlord is a job. Tenant calls, turnovers, repairs — this model prices the money cost, not your time.
Vacancy and repairs aren't optional. They're modeled here because ignoring them is how people talk themselves into bad rentals.
Diversification. Keeping the home concentrates your net worth in one asset on one street.
The tax clock is real. Section 121 lets homeowners exclude up to $250k ($500k married joint) of gain — but only if you lived in the home 2 of the last 5 years. Rent it out too long and that clock runs out.
Depreciation recapture. Rental property gets depreciated 1/27.5 of building value per year. When you sell, that depreciation is recaptured and taxed up to 25%. We flag it here but don't attempt to compute it precisely.
Educational only — not tax advice. Every situation has wrinkles a spreadsheet can't see. Talk to a CPA before you commit to either path.
Plain-language definitions
- Net proceeds
- What actually lands in your bank account after selling — sale price minus agent commissions, closing costs, and mortgage payoff.
- Monthly cash flow
- Rent collected minus every dollar you spend to hold the property that month: mortgage, taxes, insurance, management, maintenance reserve, vacancy allowance. Negative cash flow means you're paying out of pocket.
- Capital gains exclusion (Section 121)
- An IRS rule that lets a homeowner exclude up to $250,000 of profit ($500,000 married filing jointly) when they sell — provided they lived in the home at least 2 of the last 5 years. Renting the home out for more than about 3 years forfeits it.
- Depreciation recapture
- When you rent property, the IRS lets you depreciate the building. When you sell, the depreciation you claimed (or could have claimed) is taxed back at up to 25%.
Related
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Estimates only. Not an appraisal, tax advice, or lending offer. Checking here never touches your credit.