What this tool decides
You compare two paths over a holding period you choose:
- Sell now — pay off the loan, pay selling costs and estimated tax, then invest the net proceeds at your opportunity rate.
- Rent, then sell — collect after-tax rental cash flow, reinvest that cash at the same opportunity rate, then sell at the end of the hold (with depreciation and sale tax).
The verdict uses total value at the end of the holding period: invested sale portfolio vs. (equity + reinvested cash) until sale, then sale proceeds plus reinvested cash.
How this works (short)
- Fixed-rate amortization from today’s balance, rate, and remaining term.
- Rental income net of vacancy, maintenance/CapEx %, management %, property tax, insurance, HOA, landlord-paid utilities, and a turnover/lease-up reserve.
- After-tax rental cash flow using your marginal ordinary rate and residential building depreciation (27.5 years; land share excluded).
- Both paths compound cash at your investment / reinvestment return (end-of-year convention).
- Sale tax uses adjusted basis, optional §121-style exclusion, and 25% depreciation recapture in this model.
Loan and property
Monthly payment is standard fixed-rate amortization. Principal and interest are tracked month by month. Equity at any year-end is projected home value minus remaining loan balance. Home value grows at your annual appreciation assumption from today’s value.
Rental cash flow (pre-tax)
For each month we estimate:
Rent − vacancy − maintenance% − management% − P&I − property tax/12 − insurance/12 − HOA/12 − landlord utilities/12 − turnover reserve/12
Rent, property tax, and insurance step with your rent-increase and appreciation assumptions where noted in the tool. HOA, landlord utilities, and turnover are held flat in dollars unless you change them.
Tax treatment (educational)
This is a planning sketch — not a tax return, and not advice.
While renting
Taxable rental income for the year is approximated as:
Pre-tax cash flow + principal paid − depreciation
Income tax ≈ taxable income × your marginal ordinary rate (can be negative in the model if the year produces a deductible loss). After-tax cash flow = pre-tax cash flow − that tax. Depreciation is straight-line over 27.5 years on building value = cost basis × (1 − land %). We assume depreciation starts at the analysis date (as if converting to rental then).
At sale
- Amount realized (simplified) ≈ sale price − selling costs.
- Adjusted basis ≈ cost basis − depreciation taken on the rent path (sell-now path takes $0 depreciation in this comparison).
- Gain is split: depreciation taken (up to total gain) is recaptured at 25%; remaining gain may be reduced by a home-sale exclusion if you opt in ($250k or $500k style), then taxed at your long-term capital gains rate.
Real §121 eligibility, state tax, NIIT, and basis adjustments are more complex. Use a professional for decisions that hinge on tax.
Apples-to-apples wealth
Sell-path proceeds grow at your investment return each year. Rent-path after-tax cash is reinvested at that same rate: prior balance compounds for one year, then the year’s cash flow is added (end-of-year). Liquid charts show cumulative cash wealth on both paths; the rent path’s final year also adds net sale proceeds.
Property tax defaults
When auto-fill is on, annual property tax ≈ purchase price (or home value) × a state average effective rate. Those rates are approximate averages for planning — prefer your actual tax bill.
What this model does not cover
- State income tax, NIIT, AMT, or phaseouts
- Full §121 ownership/use tests, partial exclusions, or non-qualified use after conversion to rental
- 1031 exchanges, opportunity zones, or installment sales
- Variable-rate loans, refinances, HELOCs, or early payoff strategies
- CapEx spikes, major rehab, insurance claims, or eviction costs beyond the turnover reserve
- Inflation on HOA/utilities/turnover (held flat unless you edit them)
- Portfolio effects, entity structure (LLC, etc.), or lender overlays
- Live ±1–2% sensitivity ranges on the verdict (a “Coming soon” stub sits under the wealth chart for now)
Privacy
Your inputs stay in this browser for the calculation. OwnerDelta does not require an account to get a result. We do not sell leads from your numbers. Copying a share link encodes your scenario in the URL (opt-in); otherwise nothing is uploaded by this tool.
Disclaimer
OwnerDelta’s Rent vs Sell Calculator is an educational planning tool. It is not financial, tax, legal, or investment advice. Markets, taxes, and your facts change. Talk to qualified professionals before you sell, rent, or invest.