A rent vs sell calculator compares two choices for a home you are leaving: sell it now and invest the cash, or keep it and rent it out. For a $400,000 home with a $250,000 mortgage, selling nets $126,000 after 6% costs, while renting for $2,400 a month against $1,100 of costs adds $78,000 of cash flow over 5 years.
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How to use the rent vs sell calculator
- Enter the home value, mortgage balance, mortgage rate, years left on the loan and selling costs as a percentage.
- Enter the expected monthly rent and your monthly costs (mortgage payment, taxes, insurance, HOA and maintenance).
- Enter appreciation, your investment return and the number of years.
- Read which option comes out ahead and by how much.
What formula does the rent vs sell calculator use?
- Sell now: net proceeds = home value × (1 − selling costs %) − mortgage balance; these are assumed to be invested at your chosen return for the holding period.
- Keep and rent: future value = home value × (1 + appreciation)^years; outcome = future value × (1 − selling costs %) − the loan balance left after that many years of payments, plus (monthly rent − monthly costs) × months.
- Loan balance left uses a standard amortizing loan at your mortgage rate over the years remaining on the loan, so principal paydown counts toward keeping.
- Edge = keep-and-rent outcome − sell-and-invest outcome. A positive number favors renting the home out.
Rent vs sell calculator worked example
| Input | Value |
|---|---|
| Home value | $400,000 |
| Mortgage balance | $250,000 |
| Mortgage rate / years left | 6.5% / 25 |
| Selling costs | 6% |
| Rent / monthly costs | $2,400 / $1,100 |
| Appreciation / investment return | 3% / 6% a year |
| Years | 5 |
Selling now nets $126,000, which grows to about $168,616 at 6% over 5 years. Keeping the home, it is worth about $463,710 after 5 years. Payments bring the loan down to about $226,405, so a sale then, after 6% selling costs, would net about $209,482; net rent adds $78,000, for about $287,482. The rent vs sell calculator shows renting ahead by about $118,865.
Read the result carefully
The model charges selling costs on both paths and credits the principal you pay down while renting. Some shortcuts remain:
- It ignores vacancy, repairs beyond your monthly cost figure, and property management.
- It does not invest the rental cash flow, and it assumes the same monthly costs every year, even after the loan is paid off.
- It ignores income tax on rent, depreciation and capital gains.
Use it as a first screen, then run your own numbers with realistic vacancy and repair allowances.
Tax rules that can change the answer
If you lived in the home for at least 2 of the last 5 years, IRS Publication 523 lets you exclude up to $250,000 of gain ($500,000 for most married couples filing jointly) when you sell. Renting the home out for more than 3 years can make you lose that exclusion. As a landlord you report rent and deduct expenses and depreciation under IRS Publication 527, and the depreciation you claim (or could have claimed) is taxed when you sell.
Other questions to ask
- Do you want to be a landlord, and can you cover several months of vacancy or a major repair?
- Will you need the equity for your next down payment?
- Does your mortgage, HOA or insurance allow renting?
Estimates for education only, not tax, legal or financial advice. Check current rules with the tax authority or a qualified adviser.
The cost of being a landlord
Keeping a home as a rental adds work that a rent vs sell calculator does not price unless you enter it. A property manager typically charges a share of collected rent plus fees for leasing a vacant unit. On $2,400 a month, a fee of 8% to 10% is $192 to $240 a month. Managing it yourself avoids that cost but means handling repairs, tenant calls and screening. Include vacancy too: one empty month a year is about 8% of gross rent. Put these figures into the rent vs sell calculator before relying on the result.
Related converters and calculators
Related calculators:
- Rental property calculator: cash flow
- Capital gains on home sale calculator: Section 121
- 1031 exchange calculator: defer gains
- Rent vs buy calculator: next home
Sources
IRS Publication 523: Selling Your Home; IRS Publication 527: Residential Rental Property.
Questions about this calculator
Is it better to rent out or sell my house?
It depends on rent, costs, appreciation, the return you could earn elsewhere, taxes and whether you want to be a landlord.
Do I lose the $250,000 exclusion if I rent my home?
You can, if you no longer meet the 2-out-of-5-year use test when you sell.
Does the calculator include taxes?
No. It ignores income and capital gains taxes, depreciation and recapture.
What costs should I include?
Your full monthly mortgage payment, property tax, insurance, HOA dues and a maintenance allowance.
What return should I assume if I sell?
Use a realistic long-term return for how you would actually invest the proceeds.
Check the assumptions and units before relying on a result. Financial, tax and health estimates do not replace advice for your individual circumstances.
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