Should I rent or sell my house?

Free tool: Rent or sell calculator → Monthly cash flow if you rent it, cash in hand if you sell — and the date your tax-free sale window closes.

Most people who end up as landlords didn't set out to be one. A job moved, a sale fell through, a parent passed and left a house. The question shows up fast — usually with a moving truck already booked — and it tends to get answered with a single comparison: will the rent cover the mortgage?

That comparison is the most common way people get this decision wrong. Here's the fuller version, in the order we'd work through it ourselves.

Step 1: What renting really pays each month

Start with the rent you can realistically get, then subtract everything a rental costs — not just the mortgage.

Monthly	Example
Rent	$2,400
Less vacancy (5% — about 2½ weeks a year)	−$120
Mortgage, principal and interest	−$1,450
Property tax ($6,000 a year)	−$500
Landlord insurance ($1,800 a year)	−$150
Repairs reserve (8% of rent)	−$192
What's left	−$12

On paper, $2,400 of rent against a $1,450 mortgage looks like $950 a month of profit. With every cost counted, it's roughly break-even.

Three costs catch first-time landlords most often:

• Landlord insurance. Your homeowner's policy generally doesn't cover a home you rent out. A landlord (dwelling) policy usually costs more.
• Repairs you can no longer put off. When you lived there, a dripping faucet could wait. With a tenant, it can't — and a water heater always picks its own moment.
• Vacancy. Even a well-run rental sits empty between tenants while you clean, repair, and show it.

A break-even rental isn't automatically a bad idea — the tenant is paying down your mortgage, and the home may be appreciating. But it means any surprise comes out of your pocket.

Step 2: What selling puts in your hand today

Take the likely sale price, subtract selling costs (agent commissions, closing costs, and pre-sale repairs often land around 6–10%), and subtract what's left on the mortgage.

Step 3: The tax deadline that changes the answer

This is the part almost nobody mentions at the kitchen table.

If you owned and lived in the home as your main home for at least 2 of the 5 years before you sell, you can usually exclude up to $250,000 of gain from tax — $500,000 for most married couples filing jointly.

Move out and rent it, and that window starts closing. If you lived there for 2 years or more, you generally have about 3 years from the day you move out to sell and still pass the test. After that, gain that would have been tax-free becomes taxable.

So "rent it for a few years and see" is really a decision with a date on it. Renting for two years and then selling can work beautifully. Renting for four years and then selling can turn a tax-free sale into a large tax bill.

Two details worth knowing:

• Depreciation is taxed either way. While it's a rental, you deduct depreciation each year. When you sell, that depreciation can't be excluded — it's taxed at up to 25%. More in our guide to the 2-out-of-5-year rule.
• Moved before 2 years? If you have to move before you reach 2 years for a job, health, or certain unforeseen reasons, you may qualify for a partial exclusion. For a job move, the usual test is that the new job is at least 50 miles farther from the home than your old job was.

Step 4: The questions numbers can't answer

• Who fixes the toilet at 9pm? If you're moving across the country, you need a local handyman, a plumber, and someone who can let them in — or a property manager, which typically costs a percentage of rent and turns a break-even rental into a monthly loss.
• Do you have a cushion? A rental with no reserve fund turns a $1,800 HVAC repair into a crisis. A common rule of thumb is a few months of expenses set aside.
• Will you want it back? Some people rent because they plan to return. That's a good reason — just check the tax deadline against your return date.
• Do you need the equity? If your next home depends on the down payment, the decision may already be made.

When renting tends to win

• The rent comfortably covers all costs, not just the mortgage.
• You have a low fixed-rate mortgage you'd never get again.
• You're likely to sell before the tax window closes — or you're happy to hold for the long term and accept the tax trade-off.
• You have cash set aside for repairs.

When selling tends to win

• Renting is break-even or worse once every cost is counted.
• Your gain is large and fully tax-free today.
• You'll be far away, with no one local to call.
• You need the equity for your next move.

If you decide to rent

The first year is where most accidental landlords stumble, and it's rarely the big things. It's the deposit that wasn't documented, the lease from a free template that didn't fit the state, the rent that arrives by three different apps on three different days. Our guide to what to do before renting out your house covers the setup, and the first-time landlord guide covers the first 30 days.

Run your own numbers in the rent or sell calculator — it shows both answers side by side, plus your exact tax-free deadline. Or start from your city's numbers — median value, rent and property tax for cities in Texas, Florida and Washington.

Common questions

General information, not legal or tax advice. Where we state a law, we link the statute and re-check it on a schedule; your city or county can add rules of its own.