Your NYC sell or hold guide

Do not start with the rent you want. Start with the rent a tenant would realistically pay today.

Look at recently rented apartments in the building and nearby buildings, not just active listings.

Then leave room for the apartment to sit empty between tenants. A month without a tenant can erase a surprising amount of the year's profit.

Rent is not profit.

From it, you may still have to pay your mortgage, common charges, property taxes, landlord insurance, repairs and maintenance. There may also be leasing or broker costs and periods when nobody is paying rent.

If you are collecting $9,000 a month but spending close to that amount to own and operate the apartment, you are not really making $9,000. That is why our calculator looks at the money left after the costs.

If the apartment has been your primary home, selling it may qualify you for the federal home sale capital gains exclusion.

Generally, you must have owned and used the home as your main home for at least two of the five years before the sale to qualify, subject to the IRS rules and exceptions.

That means moving out does not automatically eliminate the benefit the next day. But waiting too long can matter. Before turning a valuable primary residence into a long term rental, ask a tax professional:

• If I sell now, what would I owe?
• If I sell in three years, what would I owe?
• If I sell later, what changes?

For an expensive NYC apartment, that answer can be worth a lot of money.

Rental property has another tax wrinkle.

Once you rent the apartment, you may generally be able to deduct depreciation on the eligible portion of the property. That can reduce taxable rental income while you own it.

But depreciation is not necessarily free money forever. When you eventually sell, some of that depreciation can affect the taxes due on the sale.

You do not need to become a tax accountant. You just need to know that renting it for a few years and selling later can have different tax consequences from selling your primary home today. Have a CPA model your specific situation before making the decision.

This is the part owners often miss.

Imagine you could sell today and walk away with $1 million after the mortgage, selling costs and taxes. Keeping the apartment means that $1 million remains tied up in the property.

So the question is not simply whether your apartment will be worth more in seven years. It probably could be. The better question is whether keeping it will leave you with more money than selling it and doing something else with the proceeds.

That is what the calculator is trying to compare.