Free Owner Tool
Rent it out, or sell it?
You are weighing one sum of money today against a smaller sum every year for as long as you hold. This tool works out both sides with your own figures — what a sale would actually put in your account, and what a year of renting would return once cash flow, loan paydown and appreciation are counted together.
Selling frees $0 once, today. The yearly figure counts cash flow, loan paydown and appreciation together.
How this is calculated
Two columns, worked out separately, and then compared. The selling column is one subtraction: your home value, less the mortgage payoff, less the selling costs at the percentage you set. The keeping column adds three different kinds of return that owners usually consider one at a time.
The rental side starts with gross rent, cuts it by your vacancy assumption, and calls the result rent collected. Property tax, insurance, twelve months of maintenance and reserve, and the management fee come off that. So does a full year of mortgage payments. What remains is cash flow. Then the tool amortizes your loan month by month across the first year to find how much principal you retired, and applies your growth rate to the home value for appreciation. Those three lines added together are the yearly return from keeping.
Net proceeds if sold today
Home value, minus the mortgage payoff, minus the selling costs at the percentage you entered. It is the cash that would actually reach your account, not the sale price. It can come out negative, and the tool shows that rather than hiding it.
Rent collected after vacancy
Monthly rent times twelve, reduced by the vacancy percentage you set. Every other rental figure is built on this number rather than on gross rent, because you cannot pay a manager or a plumber out of rent nobody paid you.
Annual net rental cash flow
Rent collected after vacancy, minus property tax, insurance, twelve months of maintenance and reserve, and the management fee. Then minus a full year of mortgage payments. This is the money left over, and it is often smaller than owners expect.
Loan principal paid down
Twelve months of your payment amortized properly, one month at a time, using the interest rate you entered. Early in a loan most of a payment is interest, which is why this figure is modest at first and grows every year you hold.
Appreciation
Home value times the growth rate you chose. Nobody knows this number, which is why it is a field and not a default. Run the whole comparison again at zero and see whether your answer survives it.
Years for keeping to match the sale
Net sale proceeds divided by the yearly total from keeping. It assumes the sale money sits in a drawer earning nothing, which it would not, so read it as a ceiling on the payback period rather than a forecast.
Three things the maths deliberately leaves alone. Income tax on the rent, because the rate depends on your bracket, your depreciation schedule and which state you live in. Capital gains on the sale, for the same reason. And what the sale proceeds would earn if you invested them, which is the single biggest lever in the whole comparison and belongs to a conversation with your own advisor rather than to a form on a website.
The management fee field is empty on purpose. We do not publish a rate, and a prefilled number would be wrong for most people using the page anyway, since fees move with the property, the service level, and whether the home is rented nightly or on a lease. Type in whatever figure you are actually comparing. Leave it at zero if you intend to manage the place yourself, and then be honest with yourself about the hours.
The capital gains clock starts the day you move out
This is the one hard deadline in the decision, and renting is what runs it down. Under the home sale exclusion in section 121 of the tax code, you can exclude up to $250,000 of gain as a single filer, or $500,000 filing jointly, provided you meet two tests. The IRS states both plainly in Topic 701: you must have owned the home for at least 24 months out of the five years leading up to the sale, and used it as a residence for at least 24 months of those same five years.
Work out your own last-sale date before you sign a lease
Move out, rent the home continuously, and the two years of residence you are relying on keep sliding toward the back of the five-year window. Once more than three years of renting sit between you and your last day living there, the window no longer contains two qualifying years and the exclusion is gone.
One piece of good news that surprises people. Time after you stop using the home as your principal residence is specifically carved out of the nonqualified use rules, so renting it on the way out does not shrink the exclusion proportionally the way renting it before moving in would. The clock still runs. Read IRS Publication 523 and put the question to your CPA. I am not one, and neither is any web page.
Depreciation is the other half of this and it does not go away. Publication 523 says you cannot exclude the portion of gain equal to depreciation adjustments allowed or allowable after May 6, 1997, which gets recaptured and reported under section 1250. Read that twice, because “allowable” means the IRS treats it as claimed whether you claimed it or not. An owner who rents for five years and skips the depreciation deduction still owes the recapture on the way out. If a sale is genuinely off the table and you only want to defer, our guide to the 1031 exchange on a Tahoe vacation rental covers the swap-instead-of-sell route and the qualifying-use rules attached to it.
Which state taxes the money matters more here than almost anywhere
A state line runs through the middle of Lake Tahoe, and it is worth real money in both directions. Article 10, section 1 of the Nevada Constitution provides that no income tax shall be levied upon the wages or personal income of natural persons. Rental income on the Nevada side, and the gain when a Nevada resident sells, carry federal tax and no state income tax. Read that as a personal income tax exemption rather than a blanket one. The same subsection goes on to permit taxes on the income or revenue of a business, and a sale still carries the state and county transfer tax that any Nevada deed does.
California works the other way on both counts. It taxes its residents on income from everywhere they earn it, and it taxes nonresidents on income sourced to California, which includes rent from and gain on the sale of property located in the state. Two Franchise Tax Board withholding rules reach a Nevada owner here, and both bite long before a return is filed. On a sale, real estate withholding is a prepayment of tax due on transfers of California property generally, not a nonresident-only rule, and any exemption is claimed on Form 593 handed to the escrow agent before closing rather than argued afterward. On the rental side the Board lists a rental property manager among the withholding agents who must hold back tax on California-source payments to a nonresident owner once they pass a threshold the Board sets. Check the current rate and threshold on those pages before you plan around either. Two consequences owners here miss. Living in Reno does not shelter the gain on a Tahoma cabin from California. And moving to Nevada does not retroactively rescue a California home you have already agreed to sell.
None of that is tax advice and I am not qualified to give any. It is the reason the tool stops at pre-tax figures: two owners with identical properties on opposite shores keep different amounts of the same rent, and the difference is large enough to flip a close call. Our comparison of Nevada versus California rental taxes goes through it properly.
Before you sell, check whether you are testing the wrong use
Plenty of owners run the numbers on a long-term lease, find the cash flow thin, and put the house on the market. In this region that is sometimes the wrong test. A cabin near a lift, a place with a view, or a home with sleeping capacity well beyond its bedroom count can earn on a nightly calendar what it never would on a twelve-month lease. The reverse is equally true and less often admitted: a plain three-bedroom in a Reno subdivision, forty minutes from anything a visitor wants, is a solid long-term rental and a mediocre short-term one.
So run the tool twice. Once with a lease rent, once with what nightly income would look like after the platform fees, the cleaning, the furnishing and the lodging tax — and be conservative, because the operating costs on a nightly rental are far higher than on a lease. If the answer changes between the two, the real question was never rent or sell. Our short-term versus long-term comparison for Reno lays out where each model wins, and the Reno long-term rental landlord guide covers what being a landlord here actually involves month to month.
Permits are the constraint that ruins this plan quietly. Several jurisdictions around the lake cap short-term rental certificates, and a nightly figure you cannot legally earn is not a figure. Check what your address is allowed to do before you build a decision on it.
What owners get wrong
Comparing a lump sum to an income stream as if they were the same thing
They are not, and no calculator can make them so. The sale hands you money once. Renting pays you a smaller amount repeatedly, for as long as you hold. Which one is worth more depends entirely on what the proceeds would do instead, and that is a question about your other options rather than about this house.
Forgetting that the mortgage payment is not all cost
Part of every payment buys equity back from the lender. Owners routinely look at a cash flow near zero and conclude the rental is pointless, when several thousand dollars of loan balance quietly disappeared that year. The tool splits that out on its own line so you can see it.
Leaving out the landlord costs that only appear after the tenant moves in
A landlord policy costs more than a homeowner policy. Turnovers cost money. So do the appliance that dies in year two and the fence the tenant reports in March. An estimate that skips the reserve line is not conservative, it is wrong, and it will read as a pleasant surprise right up until the first repair.
Treating an appreciation assumption as a fact
Appreciation is usually the largest number in the keeping column, and it is the only one nobody can verify. Reno and Tahoe have both delivered flat stretches and steep ones inside a single decade. If your decision reverses when you set that field to zero, then you have not decided anything yet, you have picked a growth rate.
Letting the capital gains clock run out by accident
This is the expensive one, and it is entirely avoidable. Owners rent the old house out, watch it go fine for a few years, then discover the exclusion they were counting on has expired while they were not looking. Work out the last month you could sell and still qualify, then decide with that date in front of you.
I will take a position, since the point of asking is to get one. Keeping wins more often than owners expect, mostly because the loan paydown line is invisible until somebody itemizes it. Sell when the equity is large and idle, when the house has a repair bill you do not want, when the capital gains window is about to close, or when the honest answer to “do you want to be a landlord” is no. That last one is not a soft reason. It is the one owners regret ignoring.
Frequently Asked Questions
Should I rent out my house or sell it?
This calculator will not answer that, and neither will anyone who has not read your tax return. What it does is put the two outcomes side by side: a one-time sum after the loan and the selling costs are paid, against a yearly figure built from cash flow, loan paydown and appreciation. Keeping the home usually wins on a long enough horizon, because three sources of return stack up while a lump sum only earns whatever you put it into. Selling wins when the equity is sitting idle, when the house would rent poorly, or when you simply do not want to be a landlord. That last reason is a real one and owners talk themselves out of it far too often.
How long can I rent out my home before I lose the capital gains exclusion?
The IRS test is two years of ownership and two years of use as your main home inside the five years ending on the date of sale, and those two years of use do not have to be consecutive. Rent the house out for more than three years after you move out and the five-year window no longer holds two years of living there. The exclusion is worth up to $250,000 of gain for a single filer and $500,000 for a married couple filing jointly, so the date belongs in your calendar rather than in the back of your mind. Depreciation you claim while it is a rental is treated separately and cannot be excluded even when you still qualify. Confirm your own dates with your CPA before you act on any of this.
Does living in Nevada mean I keep more of the rent than a California owner?
Usually yes, and the reason is structural rather than clever. Article 10 of the Nevada Constitution says no income tax shall be levied upon the wages or personal income of natural persons, so rent and sale gain on the Nevada side face no state income tax. California taxes its own residents on income from everywhere, and it taxes nonresidents on income sourced to California, which includes rent and gain from property located in the state. A California resident who buys in Incline Village does not escape California tax by owning across the line. Federal tax lands on everyone either way.
What number should I use for selling costs?
Enter your own, because this line is negotiable and it has moved in recent years. It has to cover the agent compensation you agree to, escrow and title, any county transfer tax, and the repairs that come out of the buyer's inspection. Transfer tax is not the same on the two sides of the lake, and a property that needs work can add several points to the total on its own. Ask an agent for a written net sheet on your specific home before you treat any percentage as settled.
Want the rent number for your actual house?
The weakest input above is the rent, because you are guessing at it. We manage long-term and short-term homes across Reno and the Tahoe basin, so we can tell you what yours would rent for on either model, in writing, before you decide anything.