Sell now or rent it out?
Compare selling your home today and investing what you walk away with, against renting it out for a few years and selling then. Both sales use the same transfer taxes, broker and fees as the net proceeds calculator.
Available now, no account neededRenting it out comes out aheadYear 1The first year in which selling then would leave you with more than selling today and investing.
Sell now: what you'd have after 10 years$1,238,178Today's net proceeds, invested
Rent it out: what you'd have after 10 years$1,452,300After selling then and paying off the mortgage
Net proceeds if you sell today$792,125After $107,875 of selling costs and the mortgage payoff
Rental cash flow, first year, a month−$266You'd pay in $266 a month in year 1: the rent doesn't cover the mortgage and running costs.
Taxes aren't included. Turn on “Federal tax” to add tax on the rent, depreciation and the tax on each sale.
After 10 years, keeping it as a rental and then selling leaves you about $214k ahead of selling now and investing.
Rent it out: the sale price that year, less selling costs and the mortgage still owed, plus any rental surplus invested. Sell now: today's net proceeds invested, plus what you'd otherwise have paid in to cover the rental. Year 0 is today.
Show the numbers
| Year | Rent it out | Sell now |
|---|---|---|
| 0 | $792,125 | $792,125 |
| 1 | $844,188 | $830,968 |
| 2 | $898,170 | $870,216 |
| 3 | $954,155 | $909,848 |
| 4 | $1,013,178 | $950,791 |
| 5 | $1,075,885 | $993,577 |
| 6 | $1,142,485 | $1,038,288 |
| 7 | $1,213,191 | $1,085,011 |
| 8 | $1,288,233 | $1,133,836 |
| 9 | $1,367,851 | $1,184,859 |
| 10 | $1,452,300 | $1,238,178 |
Where the money goes over 10 years
Both paths set the same money aside: in a year the rental costs you money, the seller invests that amount instead; in a year it pays you, the landlord invests the surplus. Both earn 4.5% a year.
| Item | Sell now | Rent it out |
|---|---|---|
| Today | ||
| Net proceeds from selling now | $792,125 | — |
| less federal tax on today's sale | $0 | — |
| While it's rented | ||
| Rent collected | — | $819,667 |
| less management | — | −$32,787 |
| less upkeep | — | −$24,590 |
| less tax, charges and insurance | — | −$249,339 |
| less mortgage payments | — | −$479,422 |
| less federal tax on the rent (a plus figure is tax saved) | — | $0 |
| Cash flow, in total | — | $33,529 |
| At the end | ||
| Money invested along the way | $797,649 | $39,053 |
| Those investments are now worth | — | $42,513 |
| The home's value | — | $2,015,875 |
| less selling costs | — | −$143,083 |
| less the mortgage still owed | — | −$463,005 |
| less federal tax on the sale, after losses carried forward | — | $0 |
| less tax on investment gains | $0 | $0 |
| What you'd have | $1,238,178 | $1,452,300 |
Why these defaults
- Price $1,500,000, mortgage $600,000, rent $6,500
- An example, not market data. Use a broker's estimate of today's price, your lender's payoff figure and the rent similar homes are listed for.
- Mortgage rate and years left
- 6.35% is the illustrative rate every tool on this site starts from; use your own loan's rate. 25 years left is an example; your statement shows it.
- Selling costs, today and later
- The same lines as the net proceeds calculator: the seller's transfer taxes, a co-op's flip tax (2% unless you change it), a 5% commission (negotiable; not set by law) and your attorney. Tax rates · checked 2026-10-14
- Empty months, management and upkeep
- 1 empty month a year; management at 4% of the rent in Manhattan and 10% in the Hamptons; upkeep at 3% of the rent for an apartment and 6% for a house. These are the same rough figures the property analysis uses, not market data.
- Property tax and insurance
- 0.8% of the price a year in Manhattan, 0.35% in the Hamptons, none for a co-op (it's in the maintenance); insurance from 0.04% to 0.4% of the price by type and place. Rough estimates, the same as the property analysis; enter your own.
- Growth: value 3%, rent 3%, costs 3% a year
- The same rate for all three, so the starting point doesn't tilt the answer. Change one at a time to see how much it matters.
- Return on the proceeds: 4.5% a year
- Our middle assumption for money invested for years, after fees and before tax; the property analysis uses the same figure.
Federal tax, if you turn it on
- Off by default
- Landlord tax depends on your whole return. Turn it on for a federal estimate; an accountant can tell you what really applies.
- Tax on the rent
- Rent less your expenses (management, repairs and upkeep, property tax, insurance, mortgage interest, a condo's common charges or a co-op's maintenance) and depreciation, taxed at your bracket. IRS Pub 527 (2025) · checked 2026-10-21
- Depreciation over 27.5 years
- Residential rental property is depreciated straight line over 27.5 years, on the building only: land can't be depreciated. For a home you turn into a rental, the starting figure is the lower of your basis and its value on the day it becomes a rental. We split off the land at 25% unless you enter your own share (Pub 527 says your property tax assessment can be used). We ignore the part-month rule in the first and last year, and for a co-op we apply the same split to your apartment instead of the corporation's property. IRS Pub 527 (2025) · checked 2026-10-21
- Losses
- A rental loss is a passive loss. If you actively manage the rental, up to $25,000 a year can offset other income, reduced by half of your modified adjusted gross income above $100,000 (so none at $150,000). Losses you can't use carry forward against later rental profit, and whatever is left is allowed in full when you sell. IRS Pub 925 (2025) · checked 2026-10-21
- Selling: depreciation comes back
- The gain up to the depreciation you took (or could have taken) can't be excluded and is taxed at no more than 25%. IRS Pub 523 (2025) · checked 2026-10-21 IRS Topic 409 · checked 2026-10-21
- The home sale exclusion
- Up to $250,000 of the rest of the gain ($500,000 married filing jointly) is tax-free if you owned and lived in the home for 2 of the 5 years before the sale. We assume it has been your main home for at least 2 years, so it applies to a sale today and to a sale up to 3 years after you move out, and not after that. Renting it after you move out doesn't reduce the exclusion within those 3 years. IRS Pub 523 (2025) · checked 2026-10-21
- Bracket 24% and gains 15%
- A middle bracket to start from; pick yours. The IRS says most people's long-term gains are taxed at no more than 15%. We also tax both paths' investment gains at that rate when you stop. IRS, 2026 tax year adjustments · checked 2026-10-21 IRS Topic 409 · checked 2026-10-21
What this leaves out
- Taxes, unless you turn them on. With them on, the estimate is federal only: no New York State or City tax, no 3.8% net investment income tax, no alternative minimum tax, no loss relief on a sale below your basis, and investment gains are taxed once, when you stop. Married filing separately and real estate professionals aren't covered.
- The home sale exclusion. The IRS lets you exclude part of the gain if you owned and lived in the home for 2 of the 5 years before the sale. Rent it out for more than three years after moving out and you'd no longer meet that test. Turn on federal tax above to include it. IRS Publication 523 · checked 2026-10-21
- Building rules. Co-ops and condos can have their own subletting and rental rules; check your building's before you plan on renting it out.
- Seasonal rentals. A Hamptons summer rental earns its rent in a few months; enter the year's rent divided by twelve.
- Timing and inflation. Costs and returns are counted once a year, and every figure is in future dollars.
An estimate to help you think it through, not financial, tax or legal advice.