🔧 Should I sell my home or rent it out?

Deciding whether to sell your current home or keep it as a rental property is a major financial crossroads. This tool compares your ending wealth under both paths.

We will look at your home's appreciation, rental cash flow, and market investment returns over your chosen time horizon to see which strategy comes out ahead.

Renting out your old home often wins when you have a strong rent-to-price ratio, a low remaining mortgage rate, or live in a rapidly appreciating market. Keeping the property allows you to build equity while tenants pay down your debt.

Per the IRS (Topic no. 415), landlords can deduct operating expenses including mortgage interest, real estate taxes, maintenance, utilities, and depreciation against rental income. These deductions can significantly offset your tax burden while renting.

Selling your home today is usually the better move if rental cash flow is thin, or if you simply have no appetite for landlording. Cashing out allows you to deploy your equity into index funds or other investments immediately.

Watch your tax timeline. The IRS (Topic no. 701) requires you to have lived in the home for 24 of the past 60 months to claim the capital gains exclusion. Renting it out for more than three years can forfeit this massive tax break.

To keep this comparison focused on the major wealth drivers, this tool uses a few stated simplifications. We exclude detailed mortgage amortization, assuming a fixed principal balance for the horizon.

We also simplify away depreciation recapture, taxes on your annual rental income, and future rent growth. Selling costs are fixed at 7% for both paths to account for standard agent commissions and closing fees.

For further related reading, check out:

• Topic no. 415, Renting residential and vacation property | Internal Revenue Service
• Topic no. 701, Sale of your home | Internal Revenue Service