Rent vs sell calculator: enter your home value, mortgage and likely rent to compare two paths side by side: selling now and investing the cash, or renting the house for a few years and selling later. The defaults are an example Twin Cities home; replace them with your own numbers.
Built by Freedom Rental Property Management in Maple Grove, Minnesota. Not sure what your house would rent for? Get a free rental analysis from recent leases near you.
Your home
As a rental
Looking ahead
Results
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Before-tax estimate for comparison only. It leaves out income tax on the gain, depreciation and depreciation recapture, and capital improvements. Your numbers stay in your browser.
Get a real rent estimateHow does the rent vs sell calculator work?
The calculator compares what you’d have at the end of the holding period on each path, before income taxes.
- Sell now. Your home value minus selling costs and the mortgage balance is the cash you walk away with. The calculator grows that cash at the return you enter, so both paths are measured over the same number of years.
- Rent, then sell. Each month the rent pays the mortgage, property tax, insurance, HOA dues, a repair reserve, vacancy and management. What’s left is cash flow. At the end, the home is sold at its grown value minus selling costs and the remaining loan balance. The total is the sale proceeds plus all the cash flow you collected.
Rent, costs and home value grow at the rates you set. The mortgage payment stays fixed, which is why a low-rate mortgage makes renting look better every year you hold.
Example: sell now or rent for 3 years first
With the default numbers, a $400,000 home with a $250,000 mortgage at 3.25% renting for $2,600 nets $122,000 from a sale now. Invested at 4%, that grows to $137,233 in 3 years. Renting for 3 years and then selling produces $196,905: $176,930 from the later sale plus $19,975 in cash flow. Renting first comes out about $59,672 ahead, before taxes.
What does the rent vs sell calculator leave out?
The calculator is a before-tax comparison. Taxes can swing the answer, so know these three rules:
- The home sale exclusion. You can exclude up to $250,000 of gain ($500,000 married filing jointly) if you owned and lived in the home at least 2 of the 5 years before the sale (IRS Publication 523). That leaves about 3 years after you move out to rent the home and still sell tax-free. The calculator shows a warning when you enter more than 3 years.
- Depreciation recapture. Depreciation claimed while the house is a rental is taxed when you sell, at up to 25%, even when the rest of the gain is excluded.
- Rental tax deductions. Mortgage interest, property tax, repairs, management and depreciation offset rental income, which can make single-family rental cash flow close to tax-free in the early years.
Our guide Should I Sell or Rent My House? walks through an example, and the tax side of turning your Minnesota home into a rental covers depreciation and Minnesota property tax classes.
Get a real rent estimate for your house
The rent you enter drives the whole answer, and online estimates can miss by hundreds of dollars a month. Request a free rental analysis and we’ll send a rent estimate built from leases near your home, plus what it would cost to run as a rental. No obligation.
We manage rental homes across the Twin Cities, including Maple Grove, Plymouth and Minneapolis. See our full service area.
Frequently asked questions
How do I know whether to rent or sell my house?
Compare the cash you’d net from selling now with the cash flow and sale proceeds you’d have after renting for a few years. Renting wins when your mortgage rate is low and the rent covers every cost with room to spare. Selling wins when you need the equity, the rent won’t cover your costs or you have a large gain and a short tax window.
Is it better to rent or sell my house when I have a low mortgage rate?
A low mortgage rate is the strongest case for renting, because the payment stays fixed while rent rises. On an example $2,600 rent, a 3.25% mortgage leaves about $502 a month in cash flow, while a 7% mortgage on the same loan amount loses about $142 a month.
How long can I rent my house before I lose the capital gains exclusion?
If you lived in the home for 2 years, you have about 3 years after moving out to sell and keep the exclusion of up to $250,000 of gain ($500,000 married filing jointly). The test looks at whether you owned and lived in the home 2 of the 5 years before the sale date.
What expenses should I include when renting out my house?
Include the mortgage payment, property tax, landlord insurance, HOA dues, a repair reserve of about 5% of rent, vacancy of about 4% of rent, a city rental license where required and a management fee if you hire a property manager.
Talk it through with a local property manager
Freedom Rental Property Management helps Twin Cities owners decide whether to rent or sell, then manages the home if renting wins. Read how to rent out your house, request a free rental analysis or contact us.