$183,296
United States
Should I sell my rental property? Hold vs sell calculator
Sell now or hold: both paths pay off the loan, both settle with the IRS, same finish line.
Deciding whether to sell a rental means comparing two futures on equal terms. Sell now: pay closing costs, pay off the loan, pay tax — including depreciation recapture — and invest the rest. Hold: keep collecting after-tax cash flow, then sell later. This calculator runs both to the same date with the same reinvestment return and shows the gap in final wealth.
Keeping it leaves you $19,919 better off after 5 years
At 5.0% a year after tax on money released by selling, selling wins if the money would earn more than 7.4% a year after tax.
$163,377
7.4%
| Sell now | Sell in year 5 | |
|---|---|---|
| Sale price | $420,000 | $498,828 |
| Selling costs | -$25,200 | -$29,930 |
| Mortgage repaid | -$240,000 | -$224,666 |
| Tax on the sale (incl. recapture) | -$26,790 | -$60,072 |
| Cash from the sale | $128,010 | $184,160 |
| After-tax rental cash over the years | — | -$645 |
4 assumptions in these figures
- Assumption: No rules are published yet for 2028 to 2030; the 2027 rules and thresholds are held constant.
- Assumption: 2027 inflation adjustments not yet published; 2026 amounts held (no indexation).
- Assumption: 2027 inflation adjustments not yet published; 2026 amounts held (no indexation).
- Assumption: 2027 inflation adjustments not yet published; 2026 amounts held (no indexation).
Worked example
A rental worth $420,000, bought for $330,000, with $240,000 still owed and $55,000 of depreciation already taken. Selling today at 6% selling costs produces a $112,000 gain, of which $55,000 is taxed as unrecaptured §1250 gain. After $26,790 of tax and repaying the loan you would have $128,010, growing to $163,377 over 5 years at 5% after tax.
Holding for 5 years and then selling ends with $183,296. Holding is ahead by $19,919. The decision flips at an alternative after-tax return of 7.4%.
If you would live in it instead
If the alternative to renting it out is moving in, OwnerCost works out the monthly cost of owning the home you live in, including closing costs and the refinance break-even.
A fair comparison
Both paths repay the mortgage, both pay tax on the sale, and both put spare cash to work at the same rate. Negative cash flow in the hold path is treated as money you would otherwise have invested, so it counts against holding. That removes the bias in simpler tools that compare a sale price with rental income.
What this calculator does not include
- 1031 exchanges, which defer the gain into a replacement property.
- The §121 exclusion if the property was once your main home.
- Suspended passive losses carried in from earlier years (enter 0 if unsure).
- State-specific capital gains treatment beyond the flat rate.
Questions landlords ask
Do I pay depreciation recapture if I didn't claim depreciation?
Yes — basis is reduced by depreciation allowed or allowable, so the gain and the recapture are computed as if you had claimed it (IRS Publication 527).
What return should I assume if I sell?
A realistic after-tax return you would actually earn, such as an index fund after tax. The break-even return tells you how much that assumption matters.
Does a 1031 exchange change the answer?
Usually, because it defers the tax. This calculator assumes a taxable sale.
Tax rules: US registry v1.0.0, last reviewed 2026-09-30. Figures in the text use the default inputs above. Sources and method.