What taxes may apply when I sell a rental property?

A sale may involve capital-gains tax and depreciation recapture. The amounts depend on the property's adjusted basis, holding history and the owner's tax situation. Confirm the calculation with a qualified tax professional.

Does the sell-versus-rent calculator include taxes?

Partially. The calculator allows the user to enter an estimated tax due on sale, but it does not calculate capital gains, depreciation recapture or the income-tax effects of rental operations.

How accurate is the sell-versus-rent estimate?

The calculator is a scenario model rather than a forecast. Its result depends on the assumptions entered, especially rent, vacancy, operating costs, appreciation, investment returns, taxes and holding period.

Rent vs Sell Calculator | Alexander Stoeber

Stoeber Agency · Compass

Sell it, or rent it out?

Q: Should I sell my house or rent it out?

The answer depends on the rent the property can earn relative to its value, its operating costs, expected appreciation, the return available on invested sale proceeds and the realistic holding period. The calculator compares both paths using the assumptions entered.

Q: How do I decide whether to hold or sell?

Compare the modeled net worth under each path over the period you would realistically hold the property. Selling provides liquid proceeds to invest. Holding provides rental income and changing property equity, less operating costs and landlord responsibilities.

Q: Does renting out my home beat selling and investing?

Sometimes. Holding tends to compare more favorably when rent is strong relative to value and the property appreciates. Selling and investing may compare more favorably when rental yield is thin, operating costs are high or the proceeds could earn more elsewhere.

Q: What are the downsides of becoming a landlord?

Potential downsides include vacancy, maintenance, management time or fees, tenant risk, limited liquidity and concentration of capital in one property. The calculator models some costs but cannot capture every operational or personal consideration.

A fair net-worth comparison for an owner deciding between selling now and investing the proceeds, or holding the property as a rental and selling later — run on your own assumptions.

Your numbers

The property you own

Current market value

Mortgage balance

Payment / mo

Mortgage rate (if any balance)

If you rent it out

Market rent / mo

Rent growth / yr

Vacancy

Management

% of rent. Set 0 if self-managing.

Property tax / yr

Your actual annual tax (Prop 13 basis).

Insurance / yr

Maintenance / yr

Share of value per year. ~1% is a common planning figure.

If you sell now

Selling cost

Tax due on sale

Investment property? Cap gains + recapture may apply. Ask your tax advisor.

Assumptions

Illustrative — change these to your own view. They are not forecasts. Appreciation can be negative.

Appreciation / yr

Investment return / yr

What sale proceeds could earn invested.

Time horizon

yrs

Hold vs sell

Enter your property’s value and the market rent to compare holding against selling.

This is an educational model, not a forecast, an appraisal, or financial advice. Results depend entirely on the assumptions you enter — appreciation and investment returns are illustrative, are not guaranteed, and can be negative. The model does not compute capital gains tax or depreciation recapture on sale, applies your entered sale-tax figure to both paths as a simplification, and excludes income-tax effects of rental operations. Becoming a landlord carries costs and risks this tool does not capture. It is not investment, tax, or legal advice. Confirm your situation with qualified financial and tax professionals before relying on it.

Alexander Stoeber · DRE #02090649 · Compass

Deciding what to do with a property

Hold or sell, honestly

Keeping a property as a rental and selling it are both defensible. Which one leaves you wealthier depends on the rent it earns relative to its value, how fast it appreciates, what the sale proceeds could earn invested instead, and how long you hold. Sentiment aside, it is an arithmetic question.

The calculator above runs a fair comparison. Selling now produces net proceeds that grow invested; holding produces rental cash flow plus equity that grows with the property. Both start from the same net-today figure and diverge from there. Where they diverge — and when one overtakes the other — is the decision.

Should I sell my house or rent it out?

It depends on the numbers, not on a rule of thumb. Holding tends to win when rent is strong relative to value and appreciation is healthy, because you earn cash flow while equity compounds on the full property. Selling and investing tends to win when the rental yield is thin, appreciation is modest, or your proceeds could earn more elsewhere. The calculator finds which path is ahead over your time horizon.

How do I decide whether to hold or sell?

Compare net worth under each path over the years you would realistically hold. Selling gives you liquid proceeds to invest; holding gives you rental income plus appreciation on a leveraged asset, less the costs and effort of being a landlord. Run both, then weigh the financial gap against the non-financial factors — concentration, liquidity, and how much you want to manage a rental.

Does renting out my home beat selling and investing?

Sometimes, not always. On a high-value, low-yield property — common in premium Santa Barbara neighborhoods, where prices are high relative to achievable rents — the case for holding rests almost entirely on appreciation, and selling-and-investing can win. On a property with strong relative rent, holding often pulls ahead. The honest answer comes from your actual rent and value, not a general claim.

What are the downsides of becoming a landlord?

Vacancy, maintenance, management time or fees, tenant risk, illiquidity, and the concentration of a large share of your net worth in a single asset. A rental also ties up capital you could diversify. These are real costs that a spreadsheet understates, which is why the management, vacancy, and maintenance inputs matter — and why the decision deserves a conversation, not just a number.

What taxes apply when I sell a rental property?

Selling an investment property can trigger capital gains tax on the appreciation and depreciation recapture on deductions taken while renting, which together can be substantial. A 1031 exchange can defer those taxes by rolling proceeds into another investment property. This is general information, not tax advice — the amounts depend on your basis, holding period, and income, so confirm them with a qualified tax professional.

Does this calculator include taxes?

Partially. It lets you enter an estimated tax due on sale and subtracts it, but it does not calculate capital gains or depreciation recapture for you, and it excludes the income-tax effects of rental operations. Those effects can move the answer meaningfully, so treat the result as a pre-tax frame and layer your tax situation on top with a professional.

How accurate is this estimate?

It is only as good as your inputs, and it is built to explore the decision rather than predict an outcome. Appreciation, rent growth, and investment returns are assumptions no one can guarantee. Use it to see how the hold-versus-sell balance responds to your numbers, then pressure-test it against your actual property and tax picture before acting.

Keep going

→ Estimate your net proceedsWhat you'd actually walk away with from a sale → Estimate your home’s valueA considered read on where it sits today → Renting and weighing a purchase?Find your rent-versus-buy breakeven → Read the latest market analysisSouth Santa Barbara County, by district

Weighing whether to hold or sell an actual property? That conversation is the useful next step — start one here. Alexander Stoeber is a real estate advisor with Compass, serving South Santa Barbara County.