Sell vs rent after PCS calculator.
When you PCS, you have a choice: take the equity now and move on, or hold the home as a rental and sell later. This calculator runs both paths with full tax modeling: depreciation, recapture, capital gains, capex, escalating costs, and Section 121 logic with service-member protections.
Built on Real Broker, LLC · James Sanson, AZ License #SA535310000 · Runs in your browser, no data stored
Scope of this tool, before you start
James Sanson is a licensed Arizona real estate agent (AZ License SA535310000) with Real Broker, LLC. He is not a CPA, tax preparer, enrolled agent, financial advisor, investment adviser, or attorney. Nothing on this page or produced by this calculator is tax, financial, investment, or legal advice. Using this calculator does not create an agent-client, advisor-client, attorney-client, or fiduciary relationship.
This is an educational tool. It takes inputs you provide and runs them through publicly available formulas (IRS Section 121, Section 1250 depreciation recapture, Schedule E, standard amortization). For any final action affecting your taxes, finances, investments, or legal exposure, talk to the right licensed professional: a CPA for tax questions, a financial advisor for investment decisions, an attorney for legal questions, and your lender for mortgage and VA entitlement questions.
About this tool
Most service members staring at a PCS get advice from both sides. Some friends say sell and take the money. Others say keep it as a rental and let it appreciate. Both can be right. Both can be wrong. The answer depends on your specific numbers and your specific tax situation.
This calculator does what most online sell-vs-rent tools skip: it models the actual taxes on both paths. Rental income tax under Schedule E. Depreciation recapture at sale. Section 121 capital gains exclusion with service-member extensions under IRC 121(d)(9). Capex for long holds. Tenant placement costs. Escalating fixed costs. Sensitivity analysis on appreciation. The result is a more honest comparison than the average online calculator gives you.
That said, this is still a model. It cannot replace a CPA. The math runs in your browser; nothing is sent to us, stored, or shared. You decide what the numbers mean for your family.
Compare both paths
About Your Home
If You Sell Now
If You Keep It as a Rental
Tax Assumptions
Side-by-Side Result
If you sell now
$0
at end of holding period
If you rent then sell
$0
at end of holding period
Sell Now: How We Got the Number
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Rent Then Sell: How We Got the Number
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Want a real conversation about your numbers?
The math is a starting point, not the whole picture. Your timeline, your family situation, the local rental market, and your specific tax situation all matter. Talk to a heroSOLD agent who has done this before.
Talk to a heroSOLD Agent →How the math works
The calculator runs two paths over the same holding period.
Path A. Sell now, invest the equity.
- Estimated sale price today minus selling costs (commission + closing) gives net equity at closing.
- If you have lived in the home 2 of the last 5 years (the Section 121 residency test) and indicate "yes" on that input, the calculator applies the federal capital gains exclusion to the current sale. For service members who qualify under IRC 121(d)(9) and have stayed under the $250k single or $500k married limits, the exclusion typically results in $0 federal capital gains tax on the current sale. Your actual tax situation depends on facts the calculator does not capture; confirm with a CPA.
- The net equity grows at your chosen investment return rate for the holding period.
- Final value = net equity after tax × (1 + return)^years.
Path B. Keep as a rental, then sell at the end.
- Income side: Gross rent escalates by your annual rent-increase rate.
- Operating side: Vacancy, management, and routine maintenance are percentages of gross rent. Taxes, insurance, and HOA escalate at the same rate as rent (proxy for cost inflation).
- Capex side: 0.5% of home value per year (0.75% for holds 7+ years) covers major capital expenses like HVAC replacement, roof, water heater, and flooring turnover. Scales with appreciating home value.
- Tenant placement: 75% of one month's rent in year 1 (initial placement) and every 3 years thereafter (turnover). Real cost that calculators usually miss.
- Mortgage: Walked month-by-month using the entered interest rate. The interest portion is deductible against rental income; the principal portion reduces the balance.
- Schedule E tax: Gross rent minus vacancy minus operating expenses minus capex minus tax/insurance/HOA minus mortgage interest minus depreciation = taxable rental income. Multiplied by your marginal tax rate. Losses do not offset other income in this calculation (conservative; the IRS has passive activity loss rules that often restrict this).
- Depreciation: 80% of the home value (building portion) divided by 27.5 years, per IRS Publication 527.
- Cash flow: Each year's net cash flow is compounded forward at the same investment return rate as Path A, so the comparison is fair.
- At sale: depreciation recapture. Total depreciation taken (or assumed) is taxed at your ordinary rate, capped at 25% federal plus Arizona's 2.5%. This is mandatory; there is no exclusion.
- At sale: capital gains. Section 121 exclusion eligibility is checked. For service members under IRC 121(d)(9), the 5-year lookback can be suspended up to 10 years of qualified extended duty. If the exclusion applies, only gains above the limit are taxed. If it does not (held too long), the entire appreciation is taxed at 15% federal plus 2.5% AZ.
- Final value: Future home value minus selling costs minus remaining mortgage minus recapture tax minus capital gains tax, plus the compounded cash flows.
Both paths land at a single dollar amount stated as "value at end of N years." That is what allows a fair comparison. The number that is higher is just the number that is higher. The sensitivity table shows how the answer shifts when appreciation changes by ±2%.
What this calculator does NOT model: passive activity loss rules that can defer or restrict rental losses, the specific federal bracket thresholds for 0% / 15% / 20% long-term capital gains rates, partial-year proration of Section 121 exclusion, like-kind exchanges (1031), opportunity zone deferrals, or unforeseen-circumstances partial exclusions. None of these change the structural ranking of paths often, but they can change the exact dollar amounts. A CPA review before any final action is strongly recommended.
Frequently asked questions
How accurate is this calculator?
It is a structurally honest model that captures the main forces: cash flow, mortgage amortization, capex, depreciation, three layers of tax (rental income tax, recapture, capital gains), and Section 121 logic with service-member extensions. For typical 5 to 7 year holds with moderate appreciation, the result is generally within 10 to 15% of what a CPA would project. Edge cases (high appreciation pushing past Section 121 limits, very long holds, complex passive loss treatment, 1031 exchanges) need professional review. Use the sensitivity table to see how robust the answer is to appreciation assumptions.
What is depreciation recapture and why is it always taxed?
The IRS lets rental property owners deduct depreciation each year (27.5-year schedule, building portion only). This reduces taxable rental income. When you sell, the IRS recovers some of that benefit by taxing the cumulative depreciation at ordinary rates, capped at 25% federally. Critical detail: the IRS assumes you took depreciation even if you did not actually claim it on your taxes. Recapture is mandatory at sale; there is no exclusion. For a $425k home held 5 years, that is about $15,000 of recapture tax. Path B includes this.
How does IRC 121(d)(9) help service members?
Section 121 of the Internal Revenue Code lets you exclude up to $250k single / $500k married filing jointly of capital gains on a primary residence, provided you lived in it 2 of the last 5 years before sale. Subsection (d)(9) lets qualified service members suspend that 5-year lookback for up to 10 years of qualified official extended duty (50+ miles from the home or in government quarters). In practice, this means a service member who lived in the home 2+ years before PCS can rent it for up to about 10 years and still qualify for the exclusion when they sell. A civilian in the same situation would lose the exclusion after about 3 years of rental. This calculator applies the service-member extension when you indicate "yes" on the service-member input.
What is qualified official extended duty?
IRC 121(d)(9) defines it as service under orders for a period of more than 90 days or for an indefinite period, AND either (a) at a duty station that is at least 50 miles from your home, OR (b) while residing under government orders in government quarters. Active-duty deployments and PCS moves to a new duty station 50+ miles away typically qualify. Reservist orders and training deployments often qualify. Talk to a CPA familiar with military taxation to confirm your specific orders qualify.
What if I have lived in the home less than 2 years?
The standard Section 121 exclusion typically does not apply. There are partial-exclusion exceptions for "unforeseen circumstances" including military PCS that can sometimes preserve a prorated portion of the exclusion. The calculator does not model this; it conservatively assumes no exclusion when you indicate you have not lived 2+ years. A CPA can review whether you qualify for partial exclusion.
Why does the calculator add capex separately from maintenance reserve?
Most online calculators conflate them. They are different things. Maintenance reserve (a percentage of gross rent) covers routine repairs and turnover: paint, plumbing leaks, screen replacements, small appliance fixes. Capex (a percentage of home value) covers big-ticket capital expenses: HVAC replacement, roof, water heater, major flooring, structural. Capex scales with home size, not rent. A $425k home and a $700k home have similarly priced HVAC systems but very different rents. The calculator uses 0.5% of home value annually (0.75% for holds 7+ years when older systems are due to fail).
Why does the calculator escalate taxes/insurance/HOA?
Property taxes get reassessed periodically (Pinal County reassesses values, and the rate can move). Insurance premiums have risen in Arizona 15 to 25% in some recent years. HOA dues escalate to keep up with reserve study requirements. The calculator escalates all three at the same rate as your rent assumption (default 3%) as a reasonable proxy. Real escalation can differ year to year, but flat assumptions over a 5+ year hold systematically understate landlord costs.
The math says renting wins. Should I rent?
Maybe. Maybe not. The math is a starting point. Things the calculator cannot model: managing a tenant from your next duty station, the emotional cost of late-night repair calls, vacancy stretches longer than expected, tenant damage, the specific Arizona Residential Landlord and Tenant Act compliance you would need to follow (statutory agent for out-of-state landlords, security deposit handling, eviction notice requirements), the impact on your VA loan entitlement for buying the next home, and the time tradeoff of being a landlord. Look at the sensitivity table. If a 2-point shift in appreciation flips the answer, the math is not as decisive as the headline number suggests.
The math says selling wins. Should I sell?
Same answer. The math is a starting point. Things the calculator cannot model: whether you might PCS back to this area someday and want the option to return to this home, whether your specific neighborhood is on the cusp of an appreciation jump (or correction), whether you have the cash-flow tolerance to ride out vacancy, and whether selling now means giving up a sub-4% mortgage that you cannot replace at current rates. Talk to a heroSOLD agent and a CPA.
Does the calculator account for the owner-occupancy clause on my mortgage?
It does not. Most owner-occupied mortgages (including VA loans) require you to live in the home for 12 months after closing. Renting before that can violate loan terms and trigger a "due on sale" event in extreme cases. After 12 months, conversion to rental is generally allowed, but VA loans specifically may require lender notification. Check your loan documents and call your lender before converting to rental. This is a hard requirement, not just a suggestion.
What about insurance changes?
Your existing homeowners insurance policy almost certainly does not cover tenants. You must switch to a landlord (DP-3) policy at the point you start renting. Landlord policies typically cost 15 to 25% more than homeowners and provide different coverage (the structure and loss-of-rents but not your personal property). Some insurers do not write landlord policies for out-of-state owners; you may need to shop. Failing to switch and having a claim can void coverage.
Are my inputs stored anywhere?
No. The calculator runs entirely in your browser. We do not send your numbers to a server, store them in cookies, or share them with third parties. You can refresh the page and all data is gone.
Related guides
- Rent vs sell after PCS, the full written guide that this calculator implements.
- Equity Estimator, what you would walk away with on the sale path.
- VA Loan Payoff Estimator, your mortgage balance at any future sale date.
- PCS Home Sale Timeline, reverse-engineer your sale timeline from your report date.
- Selling your home before a PCS, the sell-side guide.
- Selling your home remotely, if you already PCSed and need to sell from your next duty station.
- VA loan handling when you sell, assumption, payoff, entitlement.
- All calculators, the full /tools/ hub.
- Get matched with an agent, talk to a real person about your specific situation.
Want this analysis reviewed by a real person?
A calculator gives you a starting point. An experienced military-focused agent can adjust for the specifics of your property, your timeline, your next duty station, and your family situation. Tell us your situation and we will respond within one business day.
Get matched with a heroSOLD agentImportant caveats and limitations of this calculator
Not advice. This calculator provides estimates for educational purposes only. It is not financial, tax, legal, or investment advice. It does not establish an agent-client, advisor-client, attorney-client, or fiduciary relationship between you and heroSOLD, James Sanson, or Real Broker LLC.
Tax modeling is simplified. The calculator applies Section 121 of the Internal Revenue Code (capital gains exclusion on primary residence), Section 121(d)(9) (service-member extension), Section 1250 depreciation recapture, and Schedule E rental income tax treatment. It uses simplified assumptions including: 80% of home value depreciable, 27.5-year straight-line depreciation, 15% long-term capital gains federal rate, 25% maximum recapture rate, 2.5% Arizona income tax. Your actual federal capital gains bracket may be 0% or 20% depending on income. Passive activity loss rules under IRC 469 may restrict your ability to use rental losses against other income. State tax treatment outside Arizona differs. The calculator does NOT model: 1031 like-kind exchanges, opportunity zone deferrals, partial Section 121 exclusion for unforeseen circumstances, alternative minimum tax (AMT), net investment income tax (NIIT) of 3.8%, or estate planning implications.
Section 121 residency requirement. The federal home-sale capital gains exclusion requires you to have owned AND used the home as your primary residence for at least 2 of the 5 years immediately preceding the sale. Under IRC 121(d)(9), qualified service members on "qualified official extended duty" (orders for more than 90 days or indefinite period, at a duty station at least 50 miles from the home OR while in government quarters) can suspend the 5-year lookback for up to 10 years. The calculator assumes "yes" on both inputs places you within this protection. Whether your specific orders meet the qualified-official-extended-duty definition is a tax-law question that must be confirmed by a qualified CPA.
Depreciation recapture is mandatory. Even if you never claim depreciation deductions on your annual tax returns, the IRS treats depreciation as "allowed or allowable" and recaptures it when you sell. This calculator assumes you took straight-line depreciation each year of the rental period. If you converted to rental partway through the year, your actual recapture will be slightly less. There is no exclusion for recapture, and it cannot be eliminated by Section 121.
Mortgage occupancy clauses. Most owner-occupied mortgages (including VA, FHA, USDA, and conventional) require the borrower to live in the home for at least 12 months after closing. Renting before 12 months can constitute mortgage fraud and trigger acceleration of the loan. After 12 months, conversion to rental is generally permitted, but lender notification may be required. Confirm with your lender before listing the home as a rental. This calculator does not check or warn about your loan's specific occupancy terms.
Insurance changes. Standard homeowners insurance does not cover tenant-occupied properties. You must switch to a landlord policy (typically DP-3 in Arizona) before tenants move in. Failure to do so can void coverage on any claim. Landlord policies typically cost 15 to 25 percent more than homeowners. Some carriers will not write landlord policies for out-of-state owners or owners managing the property themselves. Confirm coverage availability before deciding.
Arizona landlord-tenant law. Renting a property in Arizona triggers compliance obligations under the Arizona Residential Landlord and Tenant Act (A.R.S. Title 33, Chapter 10). Out-of-state landlords must appoint a statutory agent in Arizona to receive service of process. Security deposits are capped at 1.5 months' rent and must be held in compliance with the Act. Notice requirements for entry, lease termination, and eviction are statutory and strict. Violations can result in tenant lawsuits, lost rent, and statutory penalties. If you self-manage from out of state, you bear the full compliance responsibility. Engage an Arizona-licensed property manager or an attorney to confirm compliance before renting.
VA loan entitlement. If your current home is financed with a VA loan, keeping it as a rental ties up a portion of your VA entitlement. Depending on the loan amount and your remaining entitlement, this may limit your ability to use VA financing for your next home purchase at the new duty station. Talk to a VA-experienced lender before deciding.
Market assumptions. Appreciation, rent escalation, vacancy, and maintenance rates are estimates based on historical Arizona market data. Real outcomes depend on actual market conditions, local rental demand, repair costs, vacancy duration, interest rate environment, tenant quality, and many other factors not modeled here. Past performance does not predict future results. The sensitivity table shows how the answer shifts with appreciation; the same logic applies to every other input.
Browser-side only. All calculations happen in your web browser. No data is transmitted to heroSOLD servers, stored in cookies, or shared with any third party. Refreshing the page erases all inputs.
Get qualified advice. Before making a sell-vs-rent decision, consult a CPA familiar with military taxation, a real estate attorney for landlord-tenant compliance, your mortgage lender for occupancy and entitlement questions, and a licensed real estate professional for current market conditions in your specific location. heroSOLD agents are licensed real estate professionals; we are not CPAs or attorneys, and we will tell you when you need one.
heroSOLD is a service of James Sanson, REALTOR® with Real Broker, LLC (Arizona License SA535310000). Equal Housing Opportunity. heroSOLD is not affiliated with, endorsed by, or sponsored by the U.S. Department of Defense, the U.S. Department of Veterans Affairs, or any branch of the U.S. Armed Forces.