Should I Rent or Sell My Home?

How to read the results

The Sell → Invest column shows what your net sale proceeds would be worth if invested at your chosen return rate each year. This is the opportunity cost of keeping the property — the benchmark the rental scenario must beat.

The Keep & Rent column shows your total wealth from renting: the property's equity at that year (current value appreciating minus the remaining mortgage) plus the cumulative net cash flow from renting (rent received minus all expenses and mortgage payments).

The break-even year is when the rental wealth line crosses the investment wealth line. Before that year, selling and investing outperforms. After it, keeping and renting wins.

What selling actually nets you

Most homeowners significantly overestimate their net sale proceeds. The headline sale price is reduced by: the real estate agent commission (typically 5–6%), closing costs including transfer taxes and title fees (1–3%), any pre-sale repairs or staging, payoff of the remaining mortgage, and potentially capital gains tax on profit above the primary residence exclusion.

On a $450,000 sale with a $200,000 mortgage balance and 7.5% in selling costs, the gross deductions are $33,750 in costs plus $200,000 in mortgage payoff — leaving net proceeds of around $216,250 before any tax. The calculator above works all of this out automatically from your numbers.

What renting actually nets you

Gross rental income is not net income. From the monthly rent, you must subtract: your mortgage payment (if you have one), property taxes, homeowners insurance, an HOA fee (if applicable), a maintenance reserve, and a property management fee if you use a manager. You should also budget for vacancy — most landlords lose 4–8% of annual rent to periods between tenants.

After all of those deductions, many landlords find that monthly cash flow is modest or even slightly negative in the early years, particularly in high-cost markets where property values are high relative to rents. The real wealth build comes from a combination of equity appreciation over time and the gradual reduction of the mortgage balance.

Non-financial factors worth weighing

The numbers only tell part of the story. Before deciding, also consider:

Your plans for the proceeds. If you are buying another home immediately, the sale proceeds may be needed for a down payment. If you are not, selling crystallises wealth you then have to redeploy — which requires discipline and a clear investment plan.

Landlord readiness. Owning a rental property is a second job for many people. Tenant disputes, maintenance emergencies, vacancy periods, and local housing regulations all require time, energy, and knowledge. A property manager reduces this burden but costs 8–12% of rent.

Your tax situation. If you qualify for the primary residence capital gains exclusion (up to $500,000 tax-free profit for married couples), selling now may be the most tax-efficient moment — especially if you have lived in the home long enough to qualify but are approaching the 3-year limit.

Market conditions. In a buyer's market, selling at the right price may take longer and require price reductions. In a strong seller's market, you may achieve a premium that tilts the numbers firmly toward selling.

Capital gains tax on a home sale — the basics

Profit from selling a home is a capital gain: the sale price minus your cost basis (what you originally paid, plus the cost of qualifying capital improvements). If the home has been your primary residence for at least 2 of the last 5 years, the IRS allows you to exclude up to $250,000 of gain (single filers) or $500,000 (married filing jointly) from tax entirely.

Only profit above those thresholds is taxed, at the long-term capital gains rate of 0%, 15%, or 20% depending on your income. For investment properties, or properties that no longer qualify as primary residences, the full gain is taxable. Depreciation recapture (taxed at 25%) also applies to investment properties that have been depreciated. This calculator applies a 15% rate to taxable gains as a reasonable middle-ground estimate.

Common questions

• Is it better to rent or sell my house right now?
  It depends on three things: how strong the selling market is, what rent your property can command, and how long you plan to hold it. In most markets, selling makes more sense if you need liquidity, plan to relocate, or do not want landlord responsibilities. Renting tends to outperform selling financially over longer time horizons — typically 7 to 15 years — because you retain the asset and benefit from both rental income and property appreciation simultaneously.
• What costs are deducted when I sell my home?
  The main costs are the real estate agent commission (typically 5–6% of the sale price), closing costs (1–3%), any pre-sale repairs or staging, and potentially capital gains tax on the profit. On a $400,000 home, agent commission and closing costs alone can reduce your net proceeds by $24,000–$36,000 before tax is considered.
• How does the capital gains tax exclusion work for a home sale?
  If the home has been your primary residence for at least 2 of the last 5 years, the IRS allows you to exclude up to $250,000 of profit from capital gains tax if you file as single, or $500,000 if married filing jointly. Any profit above those thresholds is taxed at the long-term capital gains rate (0%, 15%, or 20% depending on income). If the home is an investment property, the exclusion does not apply.
• What expenses do landlords typically pay each month?
  Ongoing landlord expenses typically include property taxes, homeowner's insurance, HOA fees (if applicable), a maintenance reserve (typically 1% of property value per year), and property management fees if you use a manager (usually 8–12% of monthly rent). Vacancy periods — times when the property sits empty between tenants — also represent lost income and should be factored in, usually estimated at 5–8% of annual rent.
• What is a good rental yield?
  Gross rental yield is the annual rent divided by the property value, expressed as a percentage. A gross yield above 5% is generally considered reasonable in most US markets. Net yield (after expenses) of 3–4% is typical once taxes, insurance, maintenance, and management fees are deducted. High-cost cities like San Francisco and New York often show gross yields of 2–3%, while more affordable markets may yield 7–10%.
• When does renting my home out beat selling it financially?
  Renting typically beats selling when: (1) you have a low mortgage rate you would lose by selling, (2) local rents are high relative to the property value, (3) property appreciation in your area is strong, (4) you are in a lower tax bracket and rental income would not push you into a higher one, and (5) you plan to hold for 10 or more years. The calculator above shows the exact break-even year for your specific numbers.
• Should I sell my house if I still have a mortgage?
  Having a mortgage does not prevent you from selling — your net proceeds are simply the sale price minus the remaining mortgage balance and selling costs. If your home has appreciated significantly and your equity is large, selling can still generate a substantial lump sum. If you owe close to the home's current value, net proceeds may be small, which can make renting more attractive since you keep the asset and let appreciation work in your favour.
• What is the opportunity cost of renting instead of selling?
  If you sell, you receive a lump sum that can be invested — in index funds, bonds, or other assets. The return on that investment is the opportunity cost of keeping the property. This calculator accounts for this: the "sell" scenario grows your net proceeds at your chosen investment return rate, so the comparison is apples-to-apples against the rental wealth scenario.
• How much should I charge for rent?
  A common starting point is the 1% rule — monthly rent should be roughly 1% of the property value. A $300,000 home would rent for around $3,000 per month under this rule. In practice, local market rates matter most. Research comparable rentals in your area using Zillow, Rentometer, or Craigslist to find what similar properties actually command.
• Do I need a property manager if I rent out my home?
  Not legally required, but often advisable if you live far from the property, have a full-time job, or prefer not to handle tenant calls, repairs, and lease renewals personally. Property managers typically charge 8–12% of monthly rent and handle marketing, tenant screening, maintenance coordination, and compliance. The fee is tax-deductible as a rental expense.