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Rent Out or Sell Calculator

Compare keeping your home as a rental against selling it now and investing the money, in after-tax net worth — and see how many months you have left to sell before the IRS Section 121 exclusion runs out.

2026 federal rules

Both paths run the whole way: keep it and sell later, or sell today and invest the proceeds. Every figure is after federal tax.

USD

USD

What you still owe. Enter 0 if the house is paid off — the rate and term questions disappear.

USD /mo

What a comparable house near yours rents for today, before any vacancy.

%

The rate on the loan you already have, not today's market rate. A legacy rate is the whole reason this question is hard.

yr

yr

Drag it. Every card, the chart and the tax table answer for the year you stop on.

Your purchase and the three-year clock

The Section 121 exclusion does not last while you rent the house out — it expires three years after the day you stopped living there. These four answers set the deadline.

USD

The purchase price plus capital improvements — a new roof, an addition — and closing costs you added to basis. Not repairs.

mo

0 if you are moving out now. The clock starts the day you stop using it as your main home, not the day a tenant moves in.

yr

Under two years and the two-of-five-year use test was never met, so there is no exclusion to lose.

It sets the exclusion ceiling: 250,000 dollars single or head of household, 500,000 filing jointly.

Landlord costs — 7% vacancy, 10% management, 1% upkeep

%

Months with no tenant, as a share of the year. The national rental vacancy rate was 7.3% in the second quarter of 2026.

%

Charged on rent collected, so the vacancy allowance comes off first. Single-family managers charge 8 to 12 percent; set it to 0 if you manage it yourself.

%/yr of value

Per year, as a percent of what the house is worth. One percent is the usual rule of thumb and it covers repairs and capital work together.

USD /yr

Enter the uncapped bill. A homestead exemption tied to living there — Florida's Save Our Homes 3% cap — ends the year after homestead status is removed and the property is reassessed. California's Proposition 13 is not that: its cap follows the property, so a California owner loses only the small Homeowners' Exemption.

USD /yr

A landlord policy, not a homeowners one — a homeowners policy does not validly cover a tenanted house. It generally costs about 25 percent more.

USD /mo

USD

Paint, carpet, locks, the first turn. Charged once, at the start, to the renting path only.

Market assumptions — 3% home growth, 3% rent growth, 5% invested

%

Per year. Negative is allowed; the sale price at your horizon can be below today's.

%

%

Grows the property tax, the insurance premium and the HOA fee.

%

It does two jobs: it grows the money the selling path invests, and it is what the renting path's cash flow earns on the side. Converted to a monthly rate geometrically, so 5% a year is 5% a year.

%

Percent of the sale price: agent commission, title, escrow. The national average total commission was 5.46 percent in August 2026, and title and escrow put the usual figure near 6.

Tax — 22% income, 15% on gains

%

Your federal bracket. It taxes rental profit, and it caps the rate on recaptured depreciation — a 12 percent bracket pays 12, not 25.

For 2026 the zero rate runs to 98,900 dollars of taxable income filing jointly and 49,450 single; 15 percent runs to 613,700 joint, 579,600 head of household and 545,500 single; above that it is 20. The gain itself counts toward the figure that picks your band.

%

Land is not depreciable. The IRS method is your assessor's own split between land and improvements, which is on your tax notice — 20 percent is a placeholder, not a statistic.

USD

Only if the house has been rented before. Leave it at 0 for a first conversion.

The net investment income tax applies above 200,000 dollars of modified AGI single or head of household and 250,000 filing jointly. A large gain often pushes you over in the year you sell even when your salary does not.

The three-year clock

You have 36 months left to close a sale before the $500,000 exclusion is gone. Renting past that point costs about $12,810 in tax on today's gain.

Renting it out wins, over 5 years

$14,396

Rent it out then sell: $268,032. Sell now and invest: $253,636. Both after federal tax.

Time left to sell tax-free

36 months

Close the sale within that window and up to $500,000 of gain is excluded. Depreciation is never covered.

If you sell today, you walk away with

$205,400

$410,000 at today's value, less $24,600 to sell, less $180,000 still owed, less $0 in tax.

Cash flow, month one

$38

$2,139 of rent after the vacancy allowance, less $2,101 of bills.

After income tax on the rental profit, month one keeps $38.

Tax if you sell in 5 years

$31,458

$9,440 of depreciation recaptured, $22,018 on the rest of the gain, $0 of net investment income tax.

Month one, in slices

$2,101 a month in bills

50% 15% 16% 10%
  • Mortgage P&I — $1,051 (50%)
  • Property tax — $308 (15%)
  • Landlord insurance — $188 (9%)
  • Maintenance — $342 (16%)
  • Management and HOA — $214 (10%)

Net worth by the year you sell

Keeping and renting is worth $218,199 if you sell after one year and $1,194,856 if you sell after thirty. Selling today and investing is worth $214,130 and $785,378 over the same two exits. The step down at year 4 is the Section 121 exclusion lapsing.

  • Keep and rent
  • Sell now

One point per exit year: what you are worth, after federal tax, if you rent it out until that year and then sell — against selling today and investing the money to the same year.

Your net worth drops in year 4

Renting is worth $19,310 more than selling if you sell in year 3, and only $7,549 more if you sell in year 4. Nothing changed but the Section 121 exclusion lapsing — that one year costs you $11,761.

The cheapest move is usually to rent it out and close the sale before the deadline, not to pick between renting forever and selling today.

Year by year
Sell in year Keep and rent Sell now Difference §121 still available
1 $218,199 $214,130 $4,070 Yes
2 $234,766 $223,295 $11,471 Yes
3 $252,230 $232,920 $19,310 Yes
4 $250,574 $243,025 $7,549 No
5 $268,032 $253,636 $14,396 No

Every row is a complete answer: rent it out until that year, sell, pay the tax, and this is what you are worth against having sold today. Year 5 is the one the cards answer for.

The tax bill if you sell in 5 years

Sale price $475,302
− Selling costs $28,518
− Adjusted basis after depreciation $257,091
= Gain $189,693
Depreciation recaptured $42,909
Tax on recapture $9,440
§ 121 exclusion applied $0
Taxable gain $146,784
Net investment income tax $0
Total tax $31,458

Federal only. Depreciation is recaptured at your rate capped at 25 percent, the exclusion never covers it, and the net investment income tax rides on the part the exclusion does not shield.

Month one, line by line

Gross rent $2,300
− Vacancy allowance $161
− Mortgage P&I $1,051
− Property tax $308
− Insurance $188
− Maintenance $342
− Management $214
− HOA $0
= Cash flow $38
After income tax $38

The first month at today's rent. Every figure grows from here — rent at your rent-growth rate, maintenance with the house, the rest with inflation.

How the three-year clock works

You lived there 5 years and stopped 0 months ago. Section 121 wants two of the five years before the sale to be main-home use, and the five-year window ends on the day the sale closes — so with the use you already have, the sale has to close within 36 months of the day you moved out.

Inside that window, Married filing jointly filers exclude up to $500,000 of gain. Outside it, the whole gain is taxable. It is a cliff, not a ramp.

Renting the house out after you move out does not prorate the exclusion. §121(b)(5)(C)(ii)(I) keeps any part of the five-year period after your last day of residence out of "nonqualified use" — so the rental period costs you nothing until the window closes, and then it costs you everything.

Depreciation is outside the exclusion whatever you do. §121(d)(6) excepts it, and §1016(a)(2) reduces your basis by the amount allowed "or allowable", so the $42,909 you will have depreciated by year 5 is recaptured at your rate capped at 25 percent whether or not you ever claimed it.

What this assumes, and what it does not model
  • Federal tax only. No state or local income tax, and no state-level transfer or excise tax on the sale.
  • Repairs and capital improvements are one maintenance percentage, expensed in the year they happen. Real capital work would be capitalised and depreciated on its own schedule, so this is slightly favourable to renting.
  • Property tax, insurance and HOA grow with inflation; the house grows at its own rate and so does the rent. Losing a homestead exemption when the house stops being your main home is not modelled — enter the uncapped property-tax figure.
  • Rental losses are passive: they suspend, carry forward, and release in full against the gain at the sale, per Topic 425. The 25,000-dollar active-participation allowance and its phase-out are not modelled, because they need a modified AGI figure.
  • Depreciation is charged every month whether or not you claim it, on the lesser of your adjusted basis or the house's value, land excluded, straight line over 27.5 years with a half month at each end.
  • A loss on a home converted from personal use is not deductible, so a sale below your basis produces no tax credit here.
  • No 1031 exchange. No reduced exclusion for a move forced by work, health or an unforeseeable circumstance — Publication 523 covers that and it needs facts a calculator should not guess at.
  • Rates are the 2026 federal figures. Money is rounded to the dollar where it is shown, and every total is the sum of the rounded parts, so a column can differ by a dollar from the figures above it.

Money is rounded to the dollar where it is shown, and totals are the sum of the rounded parts.

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This calculator is for informational purposes only. It does not constitute financial advice.

Rent out or sell calculator. Which path is worth more after tax, and how long you have left to sell.

A rent-out-vs-sell calculator compares keeping your home as a rental with selling it now and investing the proceeds, measured in after-tax net worth. It also counts down the IRS home-sale exclusion, which expires three years after you stop living in the house and goes in one step rather than fading.

What the Rent Out or Sell Comparison Measures

The rent-out-versus-sell comparison measures one thing on both paths: what you are worth after federal tax on the day you finally sell. One path keeps the house, collects rent for the years you pick, and sells at the end. The other sells today, pays whatever tax is due today, and invests every dollar of the proceeds at the return you enter. On the numbers this page loads with — a $410,000 house with $180,000 left at 4.25%, $2,300 of rent a month, five years of renting — the renting path lands at $268,032 and the selling path at $253,636, so the hero card reads Renting it out wins and prints $14,396.
A third number moves that answer more than the rent does. The home-sale exclusion in 26 U.S.C. §121 requires two of the five years ending on the date of sale to have been main-home use, and the five-year window ends the day the sale closes rather than the day you hand over the keys. With two years of use already banked, the sale has to close within 36 months of your move-out date. The card labeled Time left to sell tax-free counts those months down; it turns amber under a year and red at zero.
Renting the house out inside those 36 months costs nothing at all. §121(b)(5)(C)(ii)(I) keeps out of nonqualified use "any portion of the 5-year period described in subsection (a) which is after the last date that such property is used as the principal residence", and IRS Publication 523 repeats it in plain words: the period after the last date the property was used as a main home is not nonqualified use. The proration arithmetic most owners expect — rented three years out of ten, keep 70% of the exclusion — describes nonqualified use that falls before your last stretch of residence. Rental years that follow your move-out prorate nothing. The exclusion holds its full value until the window shuts and then disappears in a single step, which is why this page tracks a deadline where other tools carry a checkbox.
The deadline is worth money long before the gain approaches the ceiling. At the defaults the gain today is $85,400 against a $500,000 ceiling for a couple filing jointly, and the exclusion is still worth $12,810 of tax. Set Years you lived there as your main home to 1, so the use test was never met, and the card If you sell today, you walk away with falls from $205,400 to $192,590. The $12,810 between those two figures is the exclusion, and it is on the table for any positive gain however far below the ceiling it sits.
Depreciation sits outside the exclusion in every state of the form. §121(d)(6) excepts it and §1016(a)(2) reduces your basis by depreciation "allowed or allowable", so the charge lands whether or not you ever filed for the deduction. Five years of renting at the defaults accumulates $42,909 of depreciation, and in a 22% bracket that is $9,440 of tax on the recapture line — payable on top of $22,018 of capital-gains tax once the exclusion has lapsed, for a total tax bill of $31,458 at the five-year exit.
The tools already ranking for this question model less of that stack than their interfaces suggest. Calculator Academy publishes the whole comparison as "Net Gain / Loss = (R - C) × T + (S - P)" and charges no tax of any kind. AllTheCalculations states its own shortcut in its methodology: "Simplified taxes: ignores depreciation/recapture and Section 121 exclusion nuances; uses flat capital gains rate." New Silver collects a capital-gains rate and never asks about your residence history. The NARPM calculator, whose field set turns up again on Eaton Realty's page down to the occupancy-rate input, reduces §121 to a primary-residence toggle explained in one line: if the property qualifies as your primary residence you can exclude up to $500,000 of gain. No filing status, and no date on which that sentence stops being true. MortgageFig gets closest: it models annual depreciation and recapture at the sale, and still applies a flat $250,000 exclusion behind a toggle that never expires. If the question in front of you is the home you are moving into rather than the one you are leaving, the rent vs buy calculator answers that one instead.

How to Fill It In and Read the Answer

Ten questions are on screen when the page loads and three folds hold the other seventeen. Two of the ten — your mortgage rate and the years left on the loan — disappear the moment you set the balance to 0, because a paid-off house has neither.
1. What it's worth today, Mortgage balance left, Rent you could charge. These three carry most of the answer. The rent has to be what a comparable house near yours rents for now, before any vacancy allowance comes off.
2. Your mortgage rate and Years left on the loan. The rate on the loan you already have, not today's market rate. A legacy 4.25% is the reason this question is hard at all, and it is why the defaults show $1,051 of principal and interest inside a $2,101 monthly bill.
3. How long you'd rent it out. A slider from 1 to 30 years. Every card, the tax table and the highlighted row of the year-by-year table answer for the year you stop on. The chart plots all thirty regardless, so you can see the years you did not pick.
4. Your purchase and the three-year clock. Four questions in their own titled block: what you paid plus improvements, months since you stopped living there, years you lived there as your main home, and filing status. These four set the deadline and the ceiling, and nothing else on the form can move either one.
5. Landlord costs. A fold holding the vacancy allowance, the management fee, maintenance, property tax, insurance, any HOA fee and the one-off cost to get the house rentable. Its closed title carries the vacancy, management and upkeep rates, so you can check the three that matter without opening it.
6. Market assumptions. Home value growth, rent growth, inflation, the return on invested cash and the selling costs. The return does two jobs — it grows the selling path's proceeds and it is what the renting path's monthly cash flow earns on the side — so it is the field to move first when you want to know how much of the answer is a forecast.
7. Tax. Your income tax rate, the long-term capital-gains rate, the share of value that is land, any depreciation already claimed, and a switch for the 3.8% net investment income tax. The land share has no national figure behind it: Publication 527 points you at your own assessor's split between land and improvements, which is printed on your tax notice, and the 20% on the form is a placeholder until you replace it.
A callout titled The three-year clock sits inside the form, above the results, and says one of four things: how many months are left and what missing the deadline costs, the same with a note that there is no gain to shield at today's value, that the exclusion has already lapsed, or that the use test was never met.
Five cards read out the answer. The hero spans both columns and names the winner — Renting it out wins, Selling now wins, or The two paths land in the same place — with both net-worth figures underneath. Then Time left to sell tax-free in months, If you sell today, you walk away with (printed signed, so it goes negative on an underwater house), Cash flow, month one, and Tax if you sell in N years. A five-slice bar splits the month-one bill into principal and interest, property tax, insurance, maintenance, and management plus HOA.
Under the cards, two lines are plotted for all thirty exit years — Keep and rent against Sell now — with a mark drawn on the year the exclusion lapses. Three tables follow. Year by year gives one complete answer per exit year up to the horizon you set, including a §121 still available column that flips from Yes to No — drag the slider out to see the later exits. The tax bill if you sell in N years walks the sale from sale price down through selling costs, adjusted basis, gain, depreciation recaptured, tax on recapture, exclusion applied, taxable gain and NIIT to the total. Month one, line by line does the same for the rent. Two prose blocks carry the explanation: How the three-year clock works, written with your own numbers and open by default, and What this assumes, and what it does not model, which lists the eight simplifications in one place.

What the Exit Year Does to the Answer: How Much Renting Wins By

Year you sellMedian defaults$800k house, $300k basis, $3,800 rent
1$4,070$8,433
2$11,471$20,421
3$19,310$29,814
4 (exclusion has lapsed)$7,549-$35,535
5$14,396-$25,270
6$21,710-$14,360
7$29,472-$2,775
8$37,734$9,515
9$46,529$22,545
10$55,889$36,350

Worked Rent Out or Sell Examples

The state the page opens on: $410,000, $2,300 of rent, five years

Change nothing. A $410,000 house with $180,000 left at 4.25% over 22 years, $2,300 of rent, a $300,000 basis, five years lived there, moving out now, married filing jointly, and the horizon slider on 5.
Month one collects $2,300 of rent less the 7% vacancy allowance, against $2,101 of bills: $1,051 of principal and interest, $308 of property tax, $188 of insurance, $342 of maintenance, $214 of management and no HOA fee. Cash flow lands at $38, and it survives income tax at $38 because depreciation absorbs the profit.
Sell today and you walk away with $205,400. Rent for five years and sell then, and the tax bill is $31,458 — $9,440 of recapture on $42,909 of accumulated depreciation, $22,018 of capital-gains tax, no NIIT. The renting path still finishes ahead at $268,032 against $253,636, so the hero card reads Renting it out wins by $14,396.
Time left to sell tax-free reads 36 months, and the lapse mark on the chart sits at year 4.

Sell in year three instead of year five

Drag the horizon slider from 5 to 3 and touch nothing else. The advantage rises from $14,396 to $19,310, and the tax table changes shape completely.
At the three-year exit the exclusion is still alive: §121 exclusion applied reads $121,137, taxable gain is $0, and Total tax is $5,600 — all of it recapture on $25,455 of depreciation. At the five-year exit the exclusion line reads $0 and the total is $31,458.
Now step to 4. The exclusion has lapsed by then, and the advantage falls from $19,310 to $7,549, a drop of $11,761 in a year in which nothing about the house, the rent or the loan changed. Renting still wins at every exit year in this scenario, so there is no crossover to find. The deadline shows up here as a step down in how much you win by, while the winner stays the same. The callout titled Your net worth drops in year 4 names the drop for exactly this reason.

An $800,000 house with a $300,000 basis: the answer flips twice

Set What it's worth today to 800,000, leave the basis at 300,000, put the rent at 3,800 and the horizon on 10. The gain is now large enough that the exclusion is worth $67,800, and the shape of the whole comparison changes.
Renting is ahead by $29,814 if you sell in year 3. In year 4 the exclusion lapses and renting is behind by $35,535 — a swing of $65,349 across one year boundary. It stays behind through year 7 and pulls ahead again from year 8 at $9,515, reaching $36,350 by year 10.
Two sign changes in one scenario is why this page reports no single break-even year. A calculator that prints one crossover has to pick which of the two it means, and on these numbers either answer sends you the wrong way. The cheapest move here is neither of the two the question offers: rent it out and close the sale before month 36.

You moved out two and a half years ago

Set Months since you stopped living there to 30 and leave everything else. Time left to sell tax-free drops from 36 months to 6, the card turns amber, and the lapse mark on the chart moves to year 1.
The year-by-year table now opens in the negative. Selling wins by $10,475 if you rent for one more year and then sell, and by $4,860 at two years. Renting only pulls back ahead at year 3, by $1,139, and the gap widens from there — $7,549 at year 4, $14,396 at year 5.
Nothing about the house changed between this scenario and the default one. The first three rows of the table inverted because six months of exclusion were left instead of thirty-six, and a one-year rental now means selling outside the window.

The house is paid off

Set Mortgage balance left to 0. The mortgage rate and years-left fields disappear, and the monthly picture reverses: bills fall from $2,101 to $1,051 with no principal and interest, and month-one cash flow climbs from $38 to $1,088, of which $1,002 survives income tax.
Selling today now releases $385,400 to invest instead of $205,400, and at the 5% return that larger head start eats into the renting side: renting wins by $6,328 at the five-year horizon against $14,396 with the mortgage in place.
The deadline leaves the least room here. The advantage runs $14,662 at a year-3 exit and $1,229 at year 4 — a $13,433 drop that leaves the two paths nearly level. A paid-off house has no cheap legacy debt to defend, so the exclusion is a larger share of what renting is worth.

You only lived there a year, so there is no exclusion to lose

Set Years you lived there as your main home to 1. The two-of-five-year use test was never met, so Time left to sell tax-free reads No exclusion and the callout says the gain is fully taxable whichever path you take.
Watch what happens to the selling side. If you sell today, you walk away with falls from $205,400 to $192,590, because the $85,400 gain is now taxed at 15% instead of excluded. Renting's advantage widens to $30,214 at five years, and the year-by-year table has no step in it at all — there is nothing left to lapse.
This is the cleanest way to see what the exclusion is worth on a gain nowhere near the ceiling. $12,810 separates the two versions of the same house, on a gain of $85,400 against a $500,000 ceiling.

The Deadline, and the Tax at the Sale

months left to sell tax-free=max⁡(0, 36−m)\text{months left to sell tax-free} = \max\left(0,\ 36 - m\right)
  • mm = Months since you stopped using the house as your main home. The clock starts the day you move out, not the day a tenant moves in
  • PP = Sale price at the exit year you picked: today's value grown at your home-appreciation rate
  • csc_s = Selling costs as a share of the sale price: agent commission, title and escrow
  • B0B_0 = What you paid plus capital improvements — the basis before any depreciation comes off it
  • DD = Depreciation allowed or allowable by the exit year, including any you never claimed
  • DrecD_{\text{rec}} = The part of that depreciation actually recaptured: the lesser of D and the gain
  • GG = Gain on the sale: net proceeds less the basis after depreciation
  • CC = Exclusion ceiling set by your filing status: $250,000 single or head of household, $500,000 filing jointly
  • EE = Exclusion applied at the sale — the figure the tax table prints on the §121 exclusion applied row
  • τ\tau = Your federal income tax rate. It taxes rental profit and it caps the rate charged on recaptured depreciation
  • gg = Your long-term capital-gains rate: 0%, 15% or 20%
Two years of main-home use ending at your move-out date buys a 36-month runway, and every month since you left has already spent one of them. The deadline is a subtraction, and it falls to zero and stays there:
months left=max⁡(0, 36−m)\text{months left} = \max\left(0,\ 36 - m\right)
If the two-of-five-year use test was never met, the runway is zero from the start and there is nothing to count down.
Depreciation runs straight line over 27.5 years with a half month at each end, on the lesser of your adjusted basis or the house's value at conversion, land excluded. Publication 527 sets that lesser-of rule so nobody depreciates a decline in value that happened while the house was personal property. At the defaults the $300,000 basis is below the $410,000 value, so the basis is what gets depreciated, minus whatever share you enter as land. Basis falls as depreciation accrues:
Badj=B0−DB_{\text{adj}} = B_0 - D
G=P (1−cs)−BadjG = P\,(1 - c_s) - B_{\text{adj}}
The depreciation comes out of the gain first and is charged at your own rate, capped at 25%. Topic 409 states the cap directly: "The portion of any unrecaptured section 1250 gain from selling section 1250 real property is taxed at a maximum 25% rate." A 22% bracket therefore pays 22%, not 25%:
Drec=min⁡(D, G)Trec=Drec⋅min⁡(τ, 25%)D_{\text{rec}} = \min\left(D,\ G\right) \qquad T_{\text{rec}} = D_{\text{rec}} \cdot \min\left(\tau,\ 25\%\right)
When the gain is smaller than the depreciation — an underwater house, or one sold below what you paid — only the gain is recaptured and the rest of the depreciation is never charged, which is why the underwater case further down owes $8,761 rather than $9,440.
What is left of the gain meets the exclusion, and only inside the window:
E=min⁡(G−Drec, C) inside the window,E=0 outside itE = \min\left(G - D_{\text{rec}},\ C\right) \ \text{inside the window,} \quad E = 0 \ \text{outside it}
Gtax=G−Drec−EG_{\text{tax}} = G - D_{\text{rec}} - E
T=Trec+g⋅Gtax+NIITT = T_{\text{rec}} + g \cdot G_{\text{tax}} + \text{NIIT}
The three-year exit at the defaults shows the machinery with the exclusion alive: $121,137 on the exclusion line, $0 of taxable gain, and $5,600 of total tax that is entirely recapture on $25,455 of depreciation. The five-year exit shows it dead: $0 excluded, $22,018 of capital-gains tax, $9,440 of recapture on $42,909 of depreciation, $31,458 in total.
The net investment income tax rides on whatever the exclusion does not shield. Topic 559 puts the rate at 3.8% above $200,000 of modified AGI for single and head-of-household filers and $250,000 filing jointly, and says the tax "doesn't apply to gain from the sale of a principal residence on that portion that's excluded for income tax purposes". Those thresholds are not indexed for inflation, which is why a large gain can cross them in the year you sell even when your salary never does. The switch for it sits in the Tax fold and is off by default.
Net worth on each path is then the sale net of that tax, plus the invested cash. The renting path adds every month of positive cash flow to an account earning your return and carries suspended passive losses forward to release against the gain — Topic 425 puts it as "Generally, you may fully deduct any previously disallowed passive activity loss in the year you dispose of your entire interest in the activity." The selling path invests the net proceeds from day one at the same rate. Money is rounded to the dollar where it is printed, and every total is the sum of the rounded parts, so a column can differ by a dollar from the figures above it.

Where This Decision Goes Wrong

  • Expecting the rental years to prorate the exclusion. Nonqualified use is real, but §121(b)(5)(C)(ii)(I) excludes from it any part of the five-year period that comes after your last day of main-home use. Rent the house out for eighteen months after moving out and the exclusion is worth the same as on the day you left. Rent it for thirty-seven and it is worth nothing. The proration arithmetic applies to rental use that happened before your final stretch of residence, which is a different history from the one this calculator is built for.
  • Reading a gain far below the ceiling as permission to take your time. The ceiling caps the exclusion; it does not gate it. At the defaults an $85,400 gain against a $500,000 allowance still carries $12,810 of tax relief, and it vanishes on the same date a $400,000 gain would. The card If you sell today, you walk away with drops from $205,400 to $192,590 the moment the use test fails.
  • Assuming no depreciation deduction means no depreciation recapture. §1016(a)(2) reduces basis by depreciation "allowed or allowable", so the IRS treats you as having taken it whether you filed for it or not. Five years of renting at the defaults produces $42,909 of it and $9,440 of tax. Skipping the deduction on your return costs you the deduction and leaves the bill in place.
  • Hunting for a break-even year. The exclusion ends on a date instead of fading, so the difference between the two paths is not monotonic and a single crossover figure describes the wrong thing. Move in two directions to see it. Set Months since you stopped living there to 30 and selling wins for two years before renting takes over at year 3 by $1,139. Set the house to $800,000 against a $300,000 basis and the order reverses twice inside ten years. Drag the horizon to each exit you would actually take and read the table there.
  • Entering the property tax bill you pay today. A homestead exemption tied to owner-occupancy goes away when the house stops being your main home — Florida's Save Our Homes 3% cap ends the year after homestead status is removed, and the property is reassessed at just value. California's Proposition 13 works the other way: the cap follows the property, not the occupant, and only a change in ownership or new construction resets it, so a California owner loses only the small Homeowners' Exemption. Put the uncapped figure in the field.
  • Keeping the homeowners policy. A homeowners policy does not validly cover a tenanted house, and the Insurance Information Institute puts a landlord policy at roughly 25% more. The $2,250 default is a homeowners premium with that uplift already applied, so leaving your current premium in the field understates the bill.

The Tax Vocabulary on This Page

Section 121 exclusion

The rule that lets you exclude up to $250,000 of gain on the sale of a main home, or $500,000 on a joint return, if you owned and used it as your principal residence for at least 24 months of the 5 years ending on the date of sale. IRS Topic 701 also limits it to once every two years: "Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home."

Nonqualified use

Time the property was not your main home, which prorates the exclusion. The statutory carve-out is the one that matters here: any portion of the five-year window that falls after your last day of main-home use is not nonqualified use, so renting after you move out prorates nothing.

Adjusted basis

What you paid, plus capital improvements such as a new roof or an addition, plus closing costs you added to basis, minus depreciation allowed or allowable. Repairs do not raise it. Gain is the net sale proceeds less this figure, which is why depreciation raises the gain even when it never reduced a tax bill.

Depreciation recapture

The tax charged at the sale on the depreciation you were allowed to take on a rental. It is reported as unrecaptured section 1250 gain and taxed at your own rate capped at 25%, and the Section 121 exclusion never covers it. At the defaults five years of renting produces $9,440 of it.

Allowed or allowable

The phrase in §1016(a)(2) that decides who owes recapture. Basis falls by the depreciation you were entitled to claim, not by the amount you claimed, so an owner who never filed for the deduction still faces the recapture bill.

Net investment income tax

A 3.8% tax on investment income above $200,000 of modified AGI for single and head-of-household filers and $250,000 filing jointly. Rental income and the taxable part of a property gain both count; gain excluded under Section 121 does not. The thresholds are not indexed for inflation.

Passive loss

A rental loss that cannot offset salary in the year it happens. It suspends, carries forward, and is released in full against the gain when you dispose of your entire interest in the activity. This calculator models the suspension and the release, and leaves out the $25,000 active-participation allowance, which needs a modified AGI figure the form does not ask for.

What This Model Does Not Do

Federal tax only. State and local income tax is absent on both paths, and so is any state transfer or excise tax on the sale, which in some jurisdictions is larger than the difference the calculator reports. If your state taxes capital gains as ordinary income, the selling path in your own situation is worse than the page shows.
No 1031 exchange, and no reduced exclusion for a move forced by work, health or an unforeseeable circumstance. Publication 523 covers the reduced exclusion, and qualifying for it turns on facts — distance from a new workplace, a physician's recommendation — that a calculator has no business guessing at. If you left for one of those reasons and the 36 months have run out, the callout says so and points you at the publication rather than pretending the rule does not exist.
Every rate on the form is held flat for the whole horizon. Home growth of 3% means 3% in year one and 3% in year twenty-nine, rent growth likewise, and the invested return has no sequence to it. The honest way to use a constant-rate model is to run it twice, once pessimistically and once optimistically, and read the pair as the answer. The chart makes that cheap: one drag of the return field redraws all thirty exit years.
Repairs and capital improvements share one maintenance percentage and are expensed in the year they happen. Real capital work would be capitalized and depreciated on its own schedule, so this simplification runs slightly in favor of renting. Land is a single percentage of value; Publication 527 points at your assessor's own split between land and improvements, and the 20% on the form stands in until you replace it with the figure from your tax notice.
A loss on a home converted from personal use is not deductible, which the model honors: sell below your basis and you get no tax credit for it. On an underwater house the selling card prints the shortfall you would have to bring to the closing table rather than a negative refund.
The reasons that are not on the form are the ones that decide many of these cases. A tenant who stops paying, a roof that fails in year two, a relocation that turns permanent, a house you would be unwilling to sell at any price — none of them has a field. Nothing here is tax advice, and the rates are the 2026 federal figures. If what you need is the amortization behind the principal-and-interest line rather than the comparison, the mortgage calculator runs that on its own.

Rent Out or Sell — Frequently Asked Questions

How long can I rent out my house before I lose the capital gains exclusion?
Three years from the day you stopped living there, if you already have two years of main-home use behind you. The sale has to close inside that window. The card Time left to sell tax-free counts the months down and reads 36 the day you move out.

Does renting my house out prorate the capital gains exclusion?
No. Rental use after your last day of residence is not nonqualified use under 26 U.S.C. §121(b)(5)(C)(ii)(I), so it takes nothing off the exclusion. The exclusion holds its full value until the 36-month window shuts, and then it is gone in one step.

Do I owe depreciation recapture if I never claimed depreciation on the rental?
Yes. §1016(a)(2) reduces your basis by depreciation "allowed or allowable", so the recapture is computed on what you were entitled to claim rather than on what you put on a return. Skipping the deduction costs you the annual write-off and leaves the bill at the sale exactly where it was. This calculator charges depreciation every month for that reason, and the field marked Depreciation already claimed exists only for a house that has been rented before — leave it at 0 for a first conversion.

How much does depreciation recapture cost when I sell?
Your own income tax rate, capped at 25%. IRS Topic 409 states it as "The portion of any unrecaptured section 1250 gain from selling section 1250 real property is taxed at a maximum 25% rate", so a 22% bracket pays 22%. On the numbers this page loads with, five years of renting accumulates $42,909 of depreciation and $9,440 of recapture tax, and the Section 121 exclusion never covers a dollar of it.

Is there a break-even year for renting out versus selling?
No single one. Because the exclusion ends on a date instead of fading, the difference between the two paths can change sign twice. On an $800,000 house with a $300,000 basis, renting is ahead by $29,814 at a three-year exit, behind by $35,535 at four, and ahead again by $9,515 at eight. Read the year-by-year table for the exits you are weighing instead of looking for one crossover figure.

My gain is nowhere near $500,000. Does the deadline still matter?
Yes. The ceiling caps what the exclusion can shield; it does not decide whether the exclusion is worth anything. At the defaults the gain today is $85,400 against a $500,000 ceiling, and the exclusion is still worth $12,810. You can watch it come off: set Years you lived there to 1 and the walk-away figure falls from $205,400 to $192,590.

What happens if I move back into the house before selling?
Moving back in ends the run of post-move-out time that the statute protects, and the rental period in the middle becomes nonqualified use that prorates the exclusion. That is a different calculation from the one this page runs, and it needs the full sequence of dates you occupied the house. Publication 523's worksheets handle it. This calculator assumes you do not move back in before the sale.

Can I use the exclusion again on the house I am moving into?
Generally not within two years. IRS Topic 701 says "Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home." If you already excluded a gain recently, check that date before you plan an exit around this page's deadline.

Does the 3.8% net investment income tax apply when I sell?
It can. Rental income and the taxable part of the gain both count as net investment income, and the tax applies above $200,000 of modified AGI for single and head-of-household filers and $250,000 filing jointly. Gain excluded under Section 121 never counts. The thresholds are not indexed for inflation, so a large sale can cross them in one year even on an unchanged salary. The switch sits in the Tax fold and is off by default; the calculator prints its own NIIT line in the tax table when you turn it on.

What if I owe more than the house is worth?
The calculator computes that state rather than blocking it. Put a $300,000 value against a $340,000 balance and a $330,000 basis: the walk-away card prints -$58,000 with a note that you would have to bring that to the closing table, and month-one cash flow runs at -$804. The two paths land at -$15,736 and -$58,000 over five years, so renting wins by $42,264. A loss on a home converted from personal use is not deductible, so there is no tax credit to offset it — the $8,761 of tax at that five-year exit is entirely depreciation recapture on a house that lost value.

Is this rent out or sell calculator free, and where do my numbers go?
It is free and nothing is stored. The whole model runs in your browser: thirty exit years, a month-by-month depreciation and amortization schedule, and the full tax stack, recomputed on every keystroke. Anything you move off its default is written into the address bar, so a link reopens your scenario without a number ever reaching a server.

How accurate is this compared with asking an accountant?
It is accurate on the rules it models and silent on the ones it does not. The exclusion deadline, the depreciation method, the 25% recapture cap, the NIIT carve-out for excluded gain and the passive-loss release are all modeled against the statute and the IRS guidance linked at the foot of this page. State income tax, transfer taxes, 1031 exchanges, the reduced exclusion for a forced move and the $25,000 active-participation allowance are not. Use it to find out whether the deadline changes your plan, then take the plan to someone who can see your whole return.

The calculator says renting wins. Should I rent it out indefinitely?
Check what the same table says about the year the exclusion lapses before you commit. At the defaults renting wins at every exit year, and it still wins by $19,310 at three years against $7,549 at four — you keep $11,761 by closing the sale inside the window rather than a year outside it. The move that usually beats both sides of the original question is to rent it out and sell before month 36, which is neither renting forever nor selling today.

I have my answer. What should I check next?
Three things, in order. Find the month your deadline falls in and count backward by the time a sale takes in your market, because the deadline is measured to the closing rather than to the listing. Then move the return on invested cash by two points either way and see whether the winner changes; if it does, you are reading a forecast rather than a calculation. Last, open the Landlord costs fold and put your own numbers in the vacancy, management and maintenance fields — those three decide the cash-flow card, and the defaults are national figures rather than yours.

Sources & References

  1. IRS Topic no. 701, Sale of your home — the 250,000 and 500,000 dollar exclusion and the two-of-five-year ownership and use test
  2. IRS Publication 523, Selling Your Home — business or rental use, nonqualified use, and the reduced exclusion
  3. 26 U.S.C. section 121 — (b)(5)(C)(ii)(I) keeps post-move-out periods out of nonqualified use, and (d)(6) denies the exclusion for depreciation taken after May 6, 1997
  4. IRS Publication 527, Residential Rental Property — 27.5-year straight-line depreciation with a mid-month convention, land excluded, and the lesser of adjusted basis or fair market value at conversion
  5. IRS Topic no. 409, Capital gains and losses — the 0, 15 and 20 percent long-term rates and the 25 percent maximum on unrecaptured section 1250 gain
  6. IRS Topic no. 559, Net investment income tax — 3.8 percent above 200,000 dollars single and 250,000 dollars joint modified AGI, and the part of a principal-residence gain excluded under section 121 is not net investment income
  7. IRS Topic no. 425, Passive activities — rental real estate is passive, disallowed losses carry forward, and they become fully deductible in the year the whole interest is disposed of
  8. 26 U.S.C. section 1016(a)(2) — basis is reduced by depreciation allowed, but by not less than the amount allowable
  9. IRS Revenue Procedure 2025-32, section 4.03 — 2026 capital-gains thresholds: the zero rate runs to 98,900 dollars joint and 49,450 dollars single, and the 15 percent rate to 613,700 dollars joint and 545,500 dollars single
  10. IRS inflation adjustments for tax year 2026 — standard deduction and ordinary-income brackets, which is the rate the recapture is charged at up to the 25 percent cap
  11. U.S. Census Bureau, Residential Vacancies and Homeownership in the Second Quarter 2026 — a 7.3 percent national rental vacancy rate and a median asking rent of 1,531 dollars
  12. Median sales price of houses sold in the United States, Census Bureau and HUD via FRED — 410,700 dollars in the second quarter of 2026
  13. Zillow Observed Rent Index — a typical single-family asking rent of 2,289 dollars a month in the United States in August 2026, up 3.0 percent year over year
  14. Insurance Information Institute — a landlord policy generally costs about 25 percent more than a standard homeowners policy
  15. Freddie Mac Primary Mortgage Market Survey — a 30-year fixed-rate average of 6.76 percent in the week of September 10, 2026
  16. Clever Real Estate agent survey — a 5.46 percent national average total commission, 2.76 percent on the listing side and 2.70 percent on the buyer side
  17. All Property Management — single-family and small multifamily management fees of 8 to 12 percent of the monthly rent collected

Content verified by the Smart Calculators Team