Rent vs. Sell Calculator

How the Comparison Works

Selling converts the property into a single lump sum today. Renting keeps three separate returns running at once, which is why it often wins on a long horizon even when monthly cash flow looks unremarkable:

• Cash flow — rent minus vacancy, operating expenses, and the mortgage.
• Appreciation — and it compounds on the whole property value, not just your equity.
• Mortgage paydown — the tenant retires your loan, converting rent into equity.

The Two-Year Clock You Cannot Ignore

If the property was your primary residence for at least two of the last five years, you may be able to exclude up to $250,000 of gain from tax (single) or $500,000 (married filing jointly). Rent it out too long and that window closes, converting a tax-free gain into a taxable one. On a property with substantial appreciation this single factor can outweigh everything else this calculator models — and it is the most common reason a financially sound rental is still the wrong choice. Talk to a CPA before the clock runs out.

When Renting Usually Wins

• You have a low fixed mortgage rate that would be expensive to replace
• Rent comfortably covers the payment plus a real expense budget
• The area has steady rental demand and you can hold for many years
• Major systems are recently replaced, so near-term capital spend is low

When Selling Usually Wins

• You are inside the primary-residence exclusion window with a large gain
• Cash flow is thin or negative at realistic expense assumptions
• Roof, furnace, or plumbing will need replacing soon
• The property is far from where you live, or you do not want the work
• You need the equity for something else, including higher-interest debt

What the Numbers Leave Out

Being a landlord is work: calls at inconvenient hours, turnovers, a tenant who stops paying, a market that softens. Property is also illiquid — selling takes months, while an investment account takes days. If the spread between the two paths is modest, those non-financial factors should decide it. Our accidental landlord guide covers what the job actually involves.

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