Keep and rent, or sell now

Owners considering a move usually frame this as a rent question. What could I get for it. That is the smaller half of the decision.

The bigger half is what happens to your taxes.

If you have used the apartment as your primary residence for at least two of the last five years, a large portion of your gain can be excluded when you sell. The exclusion is 250 thousand dollars for a single filer and 500 thousand for a married couple filing jointly. That is a real benefit and it has a clock on it.

If you move out and rent the apartment, that clock starts running. Rent it long enough and you fall outside the two of five year window, and the exclusion is gone. On a New York apartment with meaningful appreciation, that can be the most expensive consequence of a decision that felt like a small one.

The second tax item is depreciation. While the apartment is a rental you depreciate it, which reduces your rental income tax each year. When you sell, that depreciation is recaptured and taxed. It is not free money, it is deferred.

On the income side, the honest math. Gross rent, minus common charges, minus property taxes, minus the mortgage, minus vacancy, minus management if you are not doing it yourself, minus repairs. Many New York apartments run at or near break even on that basis, particularly ones with high common charges or a tax line that recently stepped up.

So the case for keeping and renting is usually about the asset, not the cash flow. You are betting that the apartment appreciates more than the proceeds would if you sold and invested them, and that the gain outweighs the tax exclusion you gave up plus the recapture you will owe.

Sometimes that bet is clearly right. Sometimes it is clearly wrong. Our rent versus sell tool runs both paths side by side with those tax items included, which is the part most calculators leave out.