Keep vs Sell Rental Property Calculator
Compare the total return of holding your rental property against selling now and investing the proceeds in the stock market.
Recommendation over 5 years
KEEP
Holding beats selling by $61,012 over 5 years
Net if Sell Now
$132,050
Total if Hold 5yr
$246,219
Break-Even Year
Year 1
Year-by-Year Comparison
| Year | Property Value | Equity | Cash Flow | Total if Sell | Invest Alt. | Winner |
|---|---|---|---|---|---|---|
| 1 | $463,500 | $189,100 | $6,000 | $154,437 | $141,294 | Keep |
| 2 | $477,405 | $208,493 | $12,000 | $177,035 | $151,184 | Keep |
| 3 | $491,727 | $228,193 | $18,000 | $199,856 | $161,767 | Keep |
| 4 | $506,479 | $248,216 | $24,000 | $222,914 | $173,091 | Keep |
| 5 | $521,673 | $268,576 | $30,000 | $246,219 | $185,207 | Keep |
Note: This calculator uses simplified assumptions (2% annual principal paydown, 7% stock market alternative return). Consider a 1031 exchange to defer capital gains taxes when selling investment properties.
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Frequently asked questions
Should I keep my rental property or sell it?
There is no universal answer — it comes down to whether the continued cash flow plus appreciation on your equity is likely to beat what you would earn by selling, paying the tax, and reinvesting the net proceeds elsewhere. This calculator gives you an estimate based on the assumptions you enter, not tax or investment advice. Run a few scenarios and talk it through with a CPA or financial advisor before deciding.
How does the tax cost of selling factor into the decision?
Selling a rental usually triggers depreciation recapture (taxed up to 25%) plus capital gains tax, and possibly the 3.8% net investment income tax — that combined bill is a real drag because it shrinks the proceeds you have left to reinvest. A property that looks like a clear sell on paper can flip to a keep once you account for how much of your gain goes to taxes. The capital gains rate here is a simplification; your actual rate depends on your income, holding period, and state.
What is a 1031 exchange and how does it change this comparison?
A 1031 exchange lets you defer the capital gains and depreciation-recapture tax by rolling the full proceeds into another investment property, instead of selling outright and paying the tax now. That keeps far more money working for you, so it is often a middle path between holding the current property and a fully taxable sale. There are strict timing and like-kind rules, so coordinate any exchange with a qualified intermediary and your CPA.
Why does the calculator compare against a 7% stock market return?
To sell rationally you need somewhere better to put the money, so the model assumes you reinvest the net sale proceeds at a 7% annual return as a baseline alternative. If you expect to earn more or less elsewhere, the keep-vs-sell line moves accordingly. This is a simplified assumption to frame the trade-off, not a forecast — adjust your expectations and confirm the plan with an advisor.
How accurate are these projections?
They are estimates built on simplified assumptions you control — appreciation rate, cash flow, selling costs, a flat 2% annual principal paydown, and a 7% reinvestment return — none of which are guaranteed. Real outcomes depend on the market, your financing, and tax rules that change over time. Treat the result as a directional guide, not a recommendation, and consult a CPA for your specific situation.