Should You Sell or Rent Out Your House When You Move?

A job offer in another city. A bigger house across town. A move to be closer to family. Whatever the reason, the same question follows: should we sell the house, or keep it and rent it out?

There's no universal answer. Renting can turn a house into a long-term asset. It can also turn into a monthly drain nobody planned for. We've written before about the accidental landlord, the owner who ends up renting by default. This post is about the step before that: making the call on purpose.

Our president, Chris Twiggs, is a licensed real estate broker as well as a property manager, so we don't have a reason to push you either way. Here's how we'd think it through.

Will the rent actually cover the cost of keeping it?

Start here. Not "what's the mortgage payment," but "what does it cost to hold this house as a rental?"

Here's a simple example. These are made-up round numbers for illustration only, not market data or results from any property we manage:

Rent: $1,800 a month
Mortgage, taxes and insurance: $1,550
Maintenance reserve: $150
Vacancy allowance (about one empty month every two years): $75
What's left: $25 a month

On paper, $1,800 against $1,550 looked like $250 a month in your pocket. In reality it's close to break-even, before professional management and before the first big repair. That doesn't automatically mean sell. But you want to know the real number before you decide, not a year after.

Two line items surprise first-time landlords. Insurance: a policy written for a home you live in may not fit a rental, so talk to your agent about a landlord policy. And financing: some mortgages have owner-occupancy terms, so read your loan documents or call your lender before you move out.

Do you need the equity for your next home?

If the down payment on your next house depends on selling this one, the decision may already be made. Keeping the house means carrying two housing payments and leaving your equity tied up. Some owners can do that comfortably. Others find out the hard way that they can't.

What does the tax side look like?

This is the question people skip most often, and it can be one of the biggest numbers in the decision.

Under IRS rules, when you sell your main home you may be able to exclude up to $250,000 of gain from your income, or $500,000 for married couples filing jointly. In general, you need to have owned the home and lived in it as your main home for at least two of the five years before the sale.

That creates a window. If you lived in the house at least two years before moving out, renting it afterward doesn't automatically cost you the exclusion. IRS Publication 523 includes examples of owners who rented out a former home and still qualified because they sold within that five-year window. If you lived there two full years right before you moved, that works out to roughly three years to sell and still meet the test. Wait longer and you can lose it.

One catch: you can't exclude the part of your gain equal to depreciation you took, or were entitled to take, while the house was a rental.

We're not tax advisors, and this isn't tax or legal advice. Talk to a CPA before you decide, ideally before you move out.

Are you coming back?

If the move is temporary and you expect to return, renting can make a lot of sense. You keep the house, and a tenant helps carry it while you're gone.

If you're never coming back, ask a harder question: would you buy this house today as an investment? If the honest answer is no, that's worth listening to.

Do you want to be a landlord, especially from a distance?

Renting a house means screening applicants, answering repair calls, enforcing the lease and keeping up with landlord-tenant law in the state where the house sits. From another city or state, every one of those gets harder.

That's where good management earns its keep: same-day responses, inspections twice a year, repairs handled within seven days, and someone local who actually shows up. We've laid out the honest math in Is a Property Manager Worth It, or Should You DIY?

Is the house actually rent-ready?

A home you loved living in isn't automatically a good rental. Aging systems, deferred maintenance and layout all matter. The cost of getting it rent-ready belongs in the math, right next to the cost of getting it sale-ready. And the longer it sits empty between your move and the first tenant, the more it costs. We broke that down in The True Cost of a Vacant Rental.

When does selling usually make more sense?

The numbers are thin or negative. If rent barely covers the cost of holding the house, you're taking on landlord risk for very little.

You need the equity. Your next home, your retirement or your peace of mind may be worth more than a break-even rental.

You don't want the job. Renting is a business. If you don't want to run it or pay someone to, selling is a perfectly good answer.

When does renting usually make more sense?

Rent covers the full cost with a cushion. Not just the mortgage. Everything, including reserves and vacancy.

You'd buy it as a rental today. If the house makes sense as an investment on its own, keeping it can too.

You have a plan. That includes a timeline if "rent it for now, sell later" is the idea, especially with the tax window in mind.

Why This Matters

Most regret in this decision comes from deciding by default: keeping the house because selling felt like a hassle, or selling in a rush without seeing the rental numbers. Either choice can be the right one. It just needs to be a choice.

Frequently Asked Questions

Is it better to sell or rent out my house when I move?
It depends on whether rent covers the full cost of holding the house, whether you need the equity, your tax situation and whether you want to be a landlord. Run real numbers for both options before you decide.

Can I rent out my old house and still use the home-sale tax exclusion?
Possibly. The IRS exclusion generally requires that you owned and lived in the home for at least two of the five years before the sale, so renting for a limited time after you move may still qualify. Gain equal to rental depreciation can't be excluded. Ask a CPA about your situation.

How much rent do I need for renting to be worth it?
Enough to cover the mortgage, taxes, insurance, a maintenance reserve and vacancy, with a real cushion left over.

Should I hire a property manager if I'm moving out of state?
Usually, yes. Someone still has to show the home, screen applicants, meet vendors and handle the 9 p.m. phone call. Whether the house is in Rapid City or Billings, local help matters.

Moving soon and not sure whether to sell or rent?

Start by finding out what the house would actually rent for. Get a free rental analysis, and we'll give you the honest numbers, even if the answer is to sell. Let's talk. Blair Allen Property Management serves owners across South Dakota and Montana.

Chris Twiggs
President, Blair Allen Property Management
📞 605-545-1218
✉️ chris@blairallen.com