How to read the comparison
Sell now: the sale price minus selling costs and your mortgage payoff, invested at the return you choose. Rent, then sell: each year's rent (less vacancy and a manager fee) minus property tax, insurance, upkeep and your mortgage payments, kept at the same return, plus the equity you have when you sell at the end (after paying selling costs).
The result is the difference in total money after the years you choose. A positive number for renting does not mean renting is safe: it assumes the house is rented without trouble, the value grows as entered and you handle repairs.
Taxes that change the answer
- Home-sale exclusion. If you lived in the house for two of the last five years, the first $250,000 of gain ($500,000 jointly) is tax-free. After you move out and rent it, the clock runs: sell within three years of moving out to keep it. See capital gains on a home sale.
- Rental income is taxed as income, reduced by expenses and depreciation. Depreciation recapture is taxed (up to 25% federally) when you sell.
- Investing the sale cash also has tax. This tool ignores all of these, so treat a close result as a tie.
Being a landlord in Massachusetts
Landlords in Massachusetts hold the tenant's security deposit in a separate account and give a receipt and yearly interest (MGL c.186 s.15B), must comply with the state lead law when a child under six lives in a pre-1978 home, and must have working smoke and carbon monoxide alarms. A bad tenant is also a cost: eviction takes time and money. If you do not want that, the selling a rental guide lays out the options.