Moving? How to Decide Whether to Sell or Rent Out Your Home
Daniel ParkNo. 30
Updated
Key takeaways
- Renting works best when the rent covers all costs with room to spare and you’re comfortable being a landlord, or paying someone to be one.
- Count every cost: mortgage, taxes, insurance, HOA, repairs, vacancy and management.
- Renting too long can cost you the tax-free home sale exclusion, which generally requires living in the home 2 of the last 5 years.
- Military families get extra time on that rule while on qualifying orders.
When you move, your current home turns into a big decision. Selling gives you a clean break and cash for your next move. Renting can turn your home into a long-term investment. The right answer depends on the numbers, your plans and how much landlord work you want.
Start with five questions
- Will the rent cover every monthly cost, with a cushion?
- Do you need your equity for a down payment on the next home?
- Do you want to manage tenants and repairs, or pay a property manager?
- Might you move back someday?
- Does your HOA or condo association allow rentals, and on what terms?
Run the real numbers
Many owners compare rent to their mortgage payment and stop there. A fuller picture looks like this:
| Monthly costs to count | Why it matters |
|---|---|
| Mortgage, taxes and insurance | Landlord insurance often costs more than a homeowner policy |
| HOA or condo fees | Some associations add rental fees or restrictions |
| Repairs and upkeep | Older systems wear out faster with tenants |
| Vacancy | Plan for some empty weeks between tenants |
| Property management | Usually a percentage of rent, plus leasing fees |
Daniel’s tip: A home that breaks even on paper usually loses money in real life. Look for a cushion after every cost, not just a match with your mortgage payment.
Know the tax rules before you decide
If you sell your main home, you may be able to exclude up to $250,000 of gain, or $500,000 for most married couples filing jointly, if you owned and lived in it for at least 2 of the 5 years before the sale. Rent it out for more than about three years and you can lose that benefit. Depreciation you take while renting is also generally taxed when you sell. See IRS Publication 523 and talk with a tax advisor.
Members of the military and Foreign Service on qualified extended duty at least 50 miles away can suspend the 5-year window for up to 10 years. That’s a big reason many military families keep their homes as rentals between assignments.
Virginia landlord basics
- A security deposit can’t exceed two months’ rent, and it must be returned with an itemized list of any deductions within 45 days after the tenancy ends.
- Use a written lease that follows the Virginia Residential Landlord and Tenant Act.
- Treat every applicant the same way and follow fair housing laws.
See what your home could rent for, then compare it with your costs.
Frequently asked questions
Can I rent my home for a year and then sell?
Often, yes. As long as you still meet the 2-out-of-5-years test when you sell, the exclusion may still apply to most of your gain. Confirm with your tax advisor.
Should I hire a property manager?
If you’re moving far away or don’t want calls about repairs, a manager can be worth the fee. My Landlord’s Guide covers what to look for.
Can I see both options side by side?
Yes. I can prepare a net sheet for selling and a rental estimate for keeping, so you can compare real numbers.
Filed under Investing, Renting & Leasing, Selling Your Home
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