Rent vs. Sell Calculator
Should You Rent or Sell?
Compare selling your home today against renting it out and selling later. See which path puts more money in your pocket.
Estimates · Not tax advice
Red Roof Rentals · 253.222.3387
Advanced assumptions
Taxes are estimated. Selling now assumes the $250,000 primary-residence exemption for a single filer (IRS Section 121); joint filers may qualify for more. The rental path treats the later sale as an investment property. Talk to a CPA before deciding.
| Item | Sell Now | Rent, Sell Later |
|---|---|---|
| Net after 5 years | $0 | $0 |
| Year | Cash Flow | Cumulative | Home Value | Loan Balance | Equity |
|---|
Assumes steady rent, flat expenses and steady appreciation over the holding period. Loan paydown uses your current rate and payment. Mortgage Difference is added as a monthly cost to the sell-now path. Estimates only, not financial, tax or legal advice.
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How the Rent vs. Sell Calculator Works
Deciding whether to rent or sell your house is one of the biggest money choices a Tacoma homeowner makes. The calculator above puts both paths side by side, so you can compare real dollars instead of guessing. Here is the math behind each side.
Path 1: Sell now
Your net proceeds are what you walk away with at closing. Selling costs include agent commission, closing costs and Washington's real estate excise tax. If the home is your primary residence, the calculator applies the $250,000 capital gains exclusion before figuring any tax.
Net from selling now = Home value − Selling costs − Mortgage payoff − Capital gains tax
Path 2: Rent it out, then sell later
This side adds two things together. First is the cash flow you collect each year while the home is rented. Second is what you net when you sell at the end of the hold, after the home has grown in value and your tenant has helped pay down the loan.
Monthly cash flow = Rent after vacancy − (Mortgage + Taxes, insurance and HOA + Maintenance reserve + Management fee)
Net from renting = Total cash flow collected + Net proceeds from the later sale
Worked Example: A Tacoma Home Worth $425,000
This example uses the calculator's starting numbers, so you can follow along. The owners bought the home for $350,000, owe $260,000 at 4.5%, and pay $1,520 a month in principal and interest. It would rent for $2,600 a month. They compare selling today against renting for five years at 4% yearly appreciation.
| Sell now | Rent 5 years, then sell | |
|---|---|---|
| Sale price | $425,000 | $517,077 |
| Selling costs (8%) | −$34,000 | −$41,366 |
| Mortgage payoff | −$260,000 | −$223,406 |
| Capital gains tax (15%) | $0 | −$18,857 |
| Cash flow collected | None | +$4,540 |
| Total in your pocket | $131,000 | $237,989 |
Renting puts about $107,000 more in the owners' pocket in this example. Look at where it comes from. Monthly cash flow is small, only about $76 after every expense. The big gains come from appreciation (about $92,000) and loan paydown (about $37,000).
Two things work against the rent path. Selling now is tax-free here because of the primary residence exclusion, while the later sale is taxed. And the $131,000 from selling today could be put to work somewhere else. That is why the result depends so much on your own numbers, especially rent and appreciation.
Renting tends to win when:
- Your mortgage rate is low and hard to replace.
- The home rents for enough to cover its costs.
- You can hold for several years and let appreciation build.
- You have a Tacoma property management partner to protect the rent and the home.
Rent vs. Sell FAQ
Is it better to rent or sell my house in Tacoma?
It depends on your rent, your mortgage rate, how long you can hold and how much the home is likely to grow in value. Owners with a low rate and strong rent often come out ahead by renting. Owners who need cash now, or whose home would lose money every month, may do better selling. Run both paths in the calculator above with your own numbers.
Will I lose the capital gains exclusion if I rent my home out?
You can. The IRS exclusion generally requires that you owned and lived in the home for at least two of the five years before the sale. If you rent it out longer than about three years, you may no longer qualify, which is why the calculator taxes the later sale. Depreciation taken while renting can also be taxed when you sell. Talk with a CPA before you decide.
Why does the mortgage interest rate matter so much?
A low rate keeps your monthly payment down, which helps cash flow, and more of each payment goes to principal. If you sell and buy again, your next loan may cost more. The calculator's Mortgage Difference field lets you add that extra monthly cost to the sell-now side.
What if my home won't cash flow as a rental?
Small negative cash flow is not always a deal breaker if appreciation and loan paydown are strong. But it means you pay out of pocket every month, so plan for it. A free rental analysis will show you what rent current data supports, and our ROI calculator breaks down the full return.
Do I need a property manager if I rent out my home?
You don't have to have one, but it helps protect the asset you are holding for. A manager handles marketing, screening, rent collection, repairs and Tacoma and Washington rental rules, which matters most if you are moving out of the area. See our property management services.
Can Red Roof help me with either choice?
Yes. Red Roof Rentals manages rentals and helps owners sell, so we can walk you through both paths without pushing one. We have served Tacoma and Pierce County since 2009 and are a NARPM® affiliate member. Start with what your home is worth, or book a consultation and call 253.222.3387.