CR
Capstone Realty Professionals
Phoenix, AZ
Call 602-354-4660 Today
Decision Tool
Sell or Rent Analyzer
A side-by-side projection to help clients decide whether to sell now and invest the proceeds, or hold the property as a long-term rental.
1
Property Details
$
$
Purchase price + capital improvements
%
For depreciation calc — typical 15–25%
2
Current Financing
$
%
Existing rate on current loan
3
Rental Income
$
%
Typical 5–8% in Phoenix metro
%
4
Operating Expenses
$
Annual — inflated in projections
$
Annual landlord policy
$
Monthly
%
% of effective income
%
% of effective income (after vacancy)
%
5
Market & Tax Assumptions
%
%
S&P-like, after-tax
%
Agent commission + closing
Affects when exclusion expires if rented
Clock runs out at 36 months of rental use
%
Federal + state estimate
%
%
IRS caps at 25% (Sec. 1250)
6
Client Behavior
%
% of after-tax rental cash flow that gets invested vs. spent. Most owners spend at least some.
%
% of sale proceeds invested. Default 100% for apples-to-apples comparison.
7
Time Horizon
Comparison Period
10years
Projected Outcome
Analysis Results
Sanity Checks
Recommendation
Calculating…
Adjust inputs above to see the live recommendation.
Wealth Advantage
—
Key Signals
Monthly Cash Flow
$0
Year 1, after-tax
Cap Rate
0.00%
NOI ÷ market value
Current Equity
$0
Value − loan balance
§121 Expires
—
If rented continuously
Path A
Sell & Invest
Net Worth in 10 Years
$0
$0 total gain
Sale price today$0
Less: selling costs$0
Less: mortgage payoff$0
Less: capital gains tax$0
Net proceeds$0
Amount invested$0
Market growth (10y)$0
Path B
Rent & Hold
Net Worth in 10 Years
$0
$0 total gain
Future home value$0
Less: future loan balance$0
Less: future selling costs$0
Less: future cap gains tax$0
Less: depreciation recapture$0
Equity at exit$0
+ Reinvested cash flow$0
+ Cash flow spent (not in net worth)$0
Wealth Projection Over Time
How the Math Works
- Vacancy-adjusted reserves: Maintenance, CapEx, and management all calculated on effective income (after vacancy), not gross. No double penalty.
- Depreciation: Building value (cost basis less land %) depreciated straight-line over 27.5 years per IRS §168. Deduction reduces taxable rental income each year.
- Recapture at exit: Accumulated depreciation taxed at the recapture rate (default 25%, IRS §1250 cap) regardless of §121 exclusion. Cannot be avoided by primary residence rules.
- §121 exclusion clock: Tracks months of qualifying use. Exclusion lost if property is rented for 3+ years (failing the “2 of last 5” test). Tool flags this and applies appropriately at the chosen horizon.
- Cash flow split: Configurable % reinvested at market rate vs. spent. Spent dollars shown separately as “money in your pocket” but excluded from net-worth comparison.
- Sanity checks: Flag rent-to-value below 0.4% or above 1.5%, cost basis above current value, negative cash flow, and §121 expiration before horizon.
Disclaimer: This tool is provided for informational purposes only and does not constitute financial, legal, or investment advice. Depreciation recapture is modeled at the IRS Sec. 1250 unrecaptured gain rate (default 25%); long-term capital gains taxed at the rate entered. All projections are estimates based on the inputs provided and assumed market conditions — actual results will vary. Capstone Realty Professionals makes no representations or warranties regarding the accuracy or completeness of any analysis generated. Past market performance does not guarantee future results. Before making any real estate investment decision, consult a licensed financial advisor, CPA, or legal professional. Use of this tool does not create a client relationship with Capstone Realty Professionals.