Rent Out Your Home or Sell?
Thinking about renting out your home instead of selling it? Enter the rent and your costs to see the monthly profit or loss and the rent you need to break even.
Should You Rent Out Your Home or Sell It?
Keeping a home as a rental can make sense when the rent covers the mortgage, taxes, insurance, and the bills that stay in your name. This calculator adds up those costs and shows the monthly and yearly profit or loss at the rent you enter.
Change the proposed rent to see how the result moves. The table under the calculator shows the profit or loss at rents above and below yours, and the break-even rent is the amount that covers every cost you entered.
The numbers are cash only. They leave out the loan balance you pay down each month, any rise in the home’s value, and income taxes, all of which belong in the decision.
Example: A home that rents for $4,500 a month with $4,390 in monthly expenses earns about $110 a month, or $1,320 a year. The rent would need to be about $4,378 to break even.
Common Questions
Can I rent out a home that has an owner-occupied mortgage?
Usually, yes. Most owner-occupied loans require you to move in within 60 days of closing and live in the home for at least 12 months. After that you can generally rent it out without refinancing. Check your loan documents or ask your loan servicer.
Will the rent count as income when I buy my next home?
It can offset the old payment. On a conventional loan the lender counts 75% of the home’s market rent and sets it against the payment on the home you are leaving; it is not counted as extra income. The rules differ by loan type, so ask us before you write an offer.
What happens to the capital gains exclusion if I rent the home out?
You can exclude up to $250,000 of gain, or $500,000 for a married couple filing jointly, if you owned and lived in the home for two of the five years before the sale. Rent it out for more than three years after you move and you can lose the exclusion. Talk to a tax advisor before you decide.
Do I need different insurance for a rental?
Yes. A homeowners policy covers a home you live in. Tell your insurance agent before the tenant moves in and switch to a landlord policy, which is priced differently and does not cover the tenant’s belongings.