View Other Free Tools
Should you sell or refinance your rental property?
Work out what you'd actually walk away with from a sale — after commission, closing costs, loan payoff, and the depreciation recapture most calculators ignore — then compare it against pulling tax-free cash out through a refinance and keeping the property. Free, instant, and nothing leaves your browser.
Selling price & mortgage
What you expect the home to sell for, and the balance still owed on it.
Desired selling price*
Remaining mortgage owed
Estimated prep & repair costs
Average 35 days
All the work you need to complete before you're ready to list.
Home improvement
$
%
Cleaning and prep
$
%
Estimated on-market costs
Average 68 days
The out-of-pocket costs of carrying the home until it closes.
Monthly mortgage payments
$
%
Moving
$
%
Estimated closing costs
Average 45 days
The standard costs of the transaction, paid at closing.
Agent commission
$
%
Selling concessions
$
%
Closing fees
$
%
Taxes
$
%
Estimated net proceeds
$269,830
Selling price less your remaining mortgage and all costs of selling.
Desired selling price
$302,000
Remaining mortgage owed
$0
Est. selling costs (10.65%)
− $32,170
Net proceeds
$269,830
Cost breakdown
Prep & repair
Home improvement
$0
Cleaning and prep
$6,000
On-market
Monthly mortgage payments
$0
Moving
$500
Closing
Agent commission
$18,120
Selling concessions
$3,020
Closing fees
$1,510
Taxes
$3,020
Total selling costs
$32,170
Your current loan
Describe the mortgage as it was written. The balance you owe today and the time left on it are both worked out from these.
Current loan amount*
Interest rate*
Current term (months)*
Origination year*
The new loan
The refinance you're being quoted.
New loan amount*
New interest rate*
New term (months)*
Refinance fees
Refinancing could save you
$225 /mo
Difference between your current payment and the new one.
Monthly savings
$225 /mo
Current payment
$1,272
New payment
$1,047
Break even
5 months
Costs
− $1,000
Lifetime payment difference
-$11,426
…including cash received
$182,574
Lower every month, but $11,426 more in total. Restarting the clock stretches the loan past the 288 months left on your current one. A shorter new term fixes this.
Your loan today
Estimated balance
$184,290
Payments made
72 of 360
Payments remaining
288 months
Projection assumptions
Appreciation runs from the $302,000 selling price entered on the Sell tab.
Holding period (years)
Annual appreciation
These two paths aren't taxed the same way. Selling realizes your gain, so depreciation recapture and capital gains come out of the proceeds. A cash-out refinance is a loan — the money comes to you tax-free, and you keep the property. That difference is usually worth more than the headline sale price suggests.
Sell
Cash out, walk away
Net proceeds
$269,830
Cash today
$269,830
Monthly cash flow
$0
Equity retained
$0
Position in 5 years
$269,830
Taxes aren't included. Turn on the tax estimate in the Sell tab for a like-for-like comparison — recapture alone can be a five-figure difference.
Refinance
Pull cash out, keep the property
Cash out
$194,000
Tax on the gain
$0
Cash today
$194,000
Monthly cash flow
$0
Cash flow over 5 years
$0
Equity in 5 years
$133,741
Position in 5 years
$327,741
Cash-out and rental income aren't switched on, so this side shows no cash today and no cash flow. Open Add cash-out & rental analysis in the Refinance tab for a like-for-like comparison.
Projected difference over 5 years
$57,911 in favor of refinancing
Keeping the property projects ahead once you count tax-free cash out, ongoing cash flow, appreciation, and loan paydown.
What this projection assumes. Selling costs are applied to the projected property value so both paths are compared net of the cost of realizing them, but tax on a future sale is not modelled — your basis at that point depends on depreciation you have not taken yet. Sale proceeds are held as cash rather than reinvested; if you'd put them into another property or the market, the sell path improves by whatever that returns. Appreciation is applied evenly each year, rents and expenses are held flat, and a 1031 exchange (which can defer the tax on sale entirely) is not modelled. Treat the output as a directional comparison, not tax or investment advice.
Selling and refinancing aren't taxed the same way
This is the part consumer home-sale calculators leave out, and it usually decides the answer. When you sell a rental you realize the gain, so the IRS recaptures every dollar of depreciation you claimed at up to 25%, then taxes the remaining gain at your long-term capital gains rate. When you refinance, the money is loan proceeds rather than a gain — it arrives tax-free, and you keep the property appreciating, amortizing, and producing rent.
A property with $400,000 of equity does not hand you $400,000 either way. Run both paths before you call an agent.
Selling costs grouped by phase
Prep and repair, on-market carrying costs, then closing — each cost shown in both dollars and as a percentage of your sale price, so you can see where the money actually goes.
Depreciation recapture, not ignored
Optional tax block estimates unrecaptured §1250 gain at 25% plus capital gains at 0/15/20%, so your net proceeds figure is the one that actually lands in the bank.
Break-even in months
Your current payment against the new one, how long the monthly saving takes to cover the refinance fees, and what the change does to total interest over the life of the loan.
Cash-out and DSCR, optional
Borrowing more than you owe? See the tax-free cash it releases, how much of your invested capital comes back, and whether the property still clears a lender's 1.25 DSCR at the new payment.
How to calculate net proceeds on a home sale
Start from a realistic sale price
Use what comparable properties are closing at, not your asking price. Overstating this inflates every downstream number, since commission and closing costs are both percentages of it.
Add prep and repair costs
Everything spent getting the home ready to list — improvements, deferred maintenance, deep cleaning, staging, photography. This phase runs about 35 days on average.
Add the cost of carrying it on-market
Mortgage payments, utilities, insurance and HOA dues you keep paying while the home sits listed, plus moving costs. Homes average roughly 68 days on market.
Add closing costs
Agent commission (historically 5–6%, more negotiable since the 2024 NAR settlement), buyer concessions, title and escrow fees, and transfer taxes. Closing itself averages about 45 days.
Subtract the mortgage payoff
The full remaining balance your lender collects at closing, including any second mortgage or HELOC. What remains is your net proceeds at the closing table.
Then subtract tax on the gain
For an investment property this is the step that matters, and the one consumer calculators skip. Depreciation recapture at 25% comes first, then long-term capital gains on whatever is left.
When does refinancing actually pay for itself?
Divide your refinance fees by the monthly saving and you get the break-even point — the month the refinance stops costing you and starts paying. Fees of $6,000 against $300 a month saved means 20 months. Sell or refinance again before then and you lose money on the transaction.
Break-even alone can mislead. Refinancing a loan you are already six years into onto a fresh 30-year term stretches your debt out by those six years. The monthly payment drops and the break-even looks quick, but you may still pay more interest in total. This calculator shows lifetime savings too, so a shorter new term can reveal the better option.
Cash-out refinancing and the BRRRR method
Borrow more than you currently owe and the difference comes to you as cash. Investment properties are capped tighter than primary residences — typically 70–75% of appraised value against 80% — and most lenders want a DSCR of 1.25 or better, meaning the property's net operating income covers the new payment with a 25% cushion.
For BRRRR investors the number that matters is capital recycled: cash out divided by everything you put in. Recycling 80% or more is a strong result; 100% or more means the deal cost you nothing but time and credit. Switch on the cash-out analysis in the Refinance tab to see that percentage, the cash left in the property, and your DSCR at the new payment.
Cash-out refinance vs selling: which comes out ahead?
The Compare tab projects both paths over a holding period you choose. Selling gives you after-tax cash today and ends the income stream. Refinancing gives you tax-free cash today plus ongoing cash flow, appreciation on the full property value, and loan paydown — but leaves you servicing a larger mortgage.
Refinancing tends to win when the property still cash flows at the new payment and you have significant depreciation to recapture. Selling tends to win when cash flow is negative, the local market looks high, or you have owned the property briefly. If tax on sale is the obstacle, price a 1031 exchange with your CPA as a third option.
Frequently asked
Should I sell or refinance my rental property?
It depends on whether the property still earns its keep. Refinancing wins when the property cash flows at the new payment, you have meaningful equity, and you would owe significant tax on a sale. Selling wins when the property is cash-flow negative, the market has peaked, you have little depreciation to recapture, or you simply want out of the asset. This calculator models both paths side by side so the trade-off is a number rather than a hunch.
How do I calculate net proceeds from selling a rental property?
Start with the expected sale price, then subtract prep and repair work, on-market carrying costs, closing costs, and your remaining mortgage payoff. For an investment property, also subtract tax on the gain — the step most consumer home-sale calculators leave out.
How long does it take to break even on a refinance?
Divide total refinance fees by the amount the new loan lowers your monthly payment. Fees of $6,000 against a $300 monthly saving means a 20-month break-even. If you expect to sell or refinance again before then, the transaction loses money.
Can refinancing lower my payment but still cost me money?
Yes. Refinancing a mortgage that is already several years old onto a fresh 30-year term can add years of payments. The monthly figure may drop while total lifetime interest rises. This calculator reports lifetime savings alongside the monthly saving so you can see both.
What is depreciation recapture and how much will I owe?
When you sell a rental, the portion of your gain equal to depreciation claimed is unrecaptured section 1250 gain, taxed at a maximum 25% federal rate. Any gain above that portion is taxed at your long-term capital gains rate. The IRS can recapture depreciation you were entitled to take even if you did not claim it.
Is cash from a cash-out refinance taxable?
No. A cash-out refinance is a loan, not a realized gain, so the proceeds are not taxable income. The trade-off is that you take on debt and must service it from the property's income.
How much can I cash out on a rental property refinance?
Investment properties are commonly limited to about 70–75% LTV. Your cash out is the new loan amount less your existing payoff and refinance closing costs. Many lenders also want a DSCR of 1.25 or better.
What is a good BRRRR refinance result?
Recycling 80% or more of the cash you put in is considered a strong BRRRR. Recycling 100% or more means the property cost you nothing but time and credit. Below roughly 50%, a large share of your capital stays trapped in the property.
What is DSCR and why does it matter for a refinance?
Debt Service Coverage Ratio is net operating income divided by debt service. A DSCR of 1.25 means the property generates 25% more income than the mortgage costs. Because a cash-out refinance increases your loan balance, it usually lowers DSCR.
Should I do a 1031 exchange instead of selling outright?
A 1031 exchange can defer depreciation recapture and capital gains by rolling proceeds into another investment property through a qualified intermediary. The timelines are strict, so treat it as a third option to price with your CPA.
Does this calculator require an account?
No. Every calculation runs in your browser and nothing is sent to a server or saved. It is free to use with no sign-up.
Related tools and reading
DSCR Calculator
Check whether the property clears a lender's debt service coverage minimum at the new loan.
Amortization Calculator
See the full payment schedule and how quickly the new loan pays down.
STR Tax Calculator
Estimate short-term rental tax savings from bonus depreciation and cost segregation.
Rental Property Tax Calculator
Model the annual tax picture on a rental before deciding to hold or sell.
Material Participation Tracker
Log the IRS hours that let short-term rental losses offset active income.
Airbnb Calculator
Before you sell, check what the property could earn as a short-term rental instead.
This calculator produces estimates for planning purposes, not tax or investment advice. Tax on a sale depends on your basis, holding period, filing status, state, and prior depreciation. State income and transfer taxes, the 3.8% net investment income tax, and short-term holding periods are not modelled. Review the numbers with a qualified CPA before acting on them.
Federal tax figures follow IRS Topic 409 (capital gains and the 25% maximum on unrecaptured section 1250 gain) and Form 8824 instructions (like-kind exchange deadlines).
Free instant analysis