REAL ESTATE
Rent vs Sell Calculator
See whether renting the house and selling later leaves you with more than selling now and investing the proceeds. Every input updates the chart immediately.
Rent out$437,246Wealth if you keep the house and rent it
Sell now$160,502Wealth if you sell and invest the proceeds
Difference$276,744Positive means renting finishes ahead
THE HOUSE
The terms of keeping it.
On if this sale qualifies for the primary-residence gain exclusion.
THE CHOICE
Rent it, or sell it.
Renting finishes about $276,744 ahead after 10 years.
Rent out
$437,246
Ahead by $276,744
Sell now
$160,502
Behind by $276,744
Today's value of that gap (NPV): -$615,076
Renting pulls ahead in year 10.
Net present value discounts later dollars back to today at your after-tax investment rate. A positive NPV means renting is ahead in today's dollars. A negative NPV means selling is ahead. Investopedia explains NPV.
Year-by-year wealth
| Year | Mortgage balance | Net cash flow | Home value | Equity | Rent out | Sell now | Difference |
|---|---|---|---|---|---|---|---|
| 1 | $360,000 | -$571 | $500,000 | $140,000 | -$571 | $95,000 | -$95,571 |
| 2 | $354,809 | $52 | $525,000 | $170,191 | -$553 | $100,700 | -$101,253 |
| 3 | $349,359 | $697 | $551,250 | $201,891 | $110 | $106,742 | -$106,632 |
| 4 | $343,636 | $1,364 | $578,813 | $235,176 | $1,481 | $113,147 | -$111,666 |
| 5 | $337,627 | $2,056 | $607,753 | $270,126 | $3,626 | $119,936 | -$116,310 |
| 6 | $331,318 | $2,773 | $638,141 | $306,823 | $6,617 | $127,132 | -$120,515 |
| 7 | $324,693 | $3,515 | $670,048 | $345,354 | $10,529 | $134,760 | -$124,231 |
| 8 | $317,737 | $4,284 | $703,550 | $385,813 | $15,445 | $142,846 | -$127,401 |
| 9 | $310,433 | $5,080 | $738,728 | $428,294 | $21,451 | $151,417 | -$129,966 |
| 10 | $302,764 | $414,507 | $775,664 | $472,900 | $437,246 | $160,502 | $276,744 |
This is an illustration. It is not tax, lending, or investment advice.
Questions about renting versus selling
- How does this rent vs sell calculator work?
- It compares two futures for the same house. Sell now: pay off the mortgage, cover selling and transfer costs, pay capital gains tax on the taxable gain, and invest what is left at your after-tax investment rate. Rent out: collect rent after vacancy and management fees, pay the mortgage, maintenance, taxes, insurance, and other annual costs, set aside tax on any rental profit, and reinvest the cash that is left. At the end of the hold, the rent path sells the house too. The higher ending wealth is the better financial outcome under these assumptions. The comparison does not price your time as a landlord, vacancy surprises, or a market that misses the appreciation rate you entered.
- What does the after-tax investment rate do?
- It is the return you expect after tax if the money is invested instead of left in the house. Proceeds from selling now compound at this rate for the whole hold. Rental cash flow compounds at this rate too. The same rate discounts future wealth back to today for the net present value. Raising it makes selling now look better, because cash in hand has a stronger alternative. Lowering it favors keeping the house. Enter an after-tax rate. The model does not tax these investment gains a second time.
- What is the NPV difference?
- Net present value asks what a future pile of money is worth today. A dollar in ten years is worth less than a dollar now if you can invest the dollar in the meantime. The NPV difference discounts both wealth paths at your after-tax investment rate, then subtracts the sell-now path from the rent path. A positive number means renting is ahead in today’s dollars. A negative number means selling is ahead. The ending-wealth gap and the NPV can disagree when most of one path’s advantage shows up late.
- How is the primary-residence exclusion modeled?
- If you mark the home as a primary residence, the model treats the sale as qualifying and leaves the first $500,000 of gain untaxed. That is the exclusion for married people filing jointly. Single filers can exclude $250,000; this calculator uses the $500,000 limit. Gain above the limit is taxed at your capital gains rate. If the switch is off, the full gain is taxed. The years-to-hold input does not turn the exclusion on or off. You qualify when you have owned and lived in the home for at least two of the five years before the sale.