Rent or sell

Should you rent out your home or sell it when you move?

Many first-time owners keep their starter condo when they buy a bigger home and become landlords almost by accident. Sometimes that builds wealth; sometimes the rent does not cover the payment and the tax break on selling quietly expires. This hub lays out the numbers and rules to check before you decide.

Compare rent vs sell Sell your home

Empty Seattle condo with keys on the kitchen counter and a city view — AI-generated concept illustration; not a photo of a specific place or property.

Quick answer

Rent it out only if the rent covers the mortgage, HOA, property tax, landlord insurance, repairs, vacancy and management with room to spare, and you are prepared for Washington's landlord-tenant rules. Sell if the cash flow is negative and you would mainly be holding it hoping for appreciation. Watch the tax clock: if you owned and lived in the home as your main residence for at least two of the last five years, you may exclude up to $250,000 of gain ($500,000 for most married couples filing jointly) when you sell; renting it too long can push you outside that window, and depreciation taken while renting is taxed when you sell. Check your loan's occupancy terms, HOA leasing rules and, in Seattle, rental registration before signing a lease.

2 of 5 years

Ownership and use test for the IRS home-sale gain exclusion

$250K / $500K

Maximum excluded gain, single / most joint filers (IRS Publication 523)

RCW 59.18

Washington's Residential Landlord-Tenant Act applies once you lease it

Questions this hub answers

should i sell or rent my house
should i rent out my house or sell
should i rent or sell my condo
first time home buyer condo rent vs sell
accidental landlord
converting primary residence to rental
landlord insurance

How to decide in five steps

01
Run honest cash flow
Start from realistic rent for comparable units, then subtract mortgage, HOA, property tax, landlord insurance, a repair reserve, vacancy and management. Negative monthly cash flow is a subsidy you pay.
02
Check the tax window
Count when you moved out. Selling within the IRS ownership-and-use window can keep the gain exclusion; renting for years can lose it. Ask a tax adviser about depreciation recapture.
03
Read your loan and HOA documents
Many owner-occupied loans require you to live in the home for a period after closing. Condo declarations can cap or restrict leasing.
04
Learn the local landlord rules
Washington's landlord-tenant law sets deposits, notices and rent-increase limits. Seattle requires rental properties to be registered and inspected under its rental registration program and has additional tenant protections.
05
Compare with selling now
Estimate net proceeds after selling costs and tax, then ask where that cash would go — a larger down payment can lower your next mortgage more than the rental earns.

Rent it out or sell it?

Question	Leans rent	Leans sell
Monthly cash flow after all costs	Positive with a reserve	Negative or break-even
Tax exclusion window	Already outside it, or plan to sell inside it	About to lose the exclusion
HOA leasing rules	Rentals allowed, no cap reached	Cap or waiting list
Your time and distance	Local, or will hire management	Moving away, no management budget
Need for cash	Next purchase is already funded	Need the equity for the next down payment

Residential lease paperwork, house keys and a two-column notebook — AI-generated concept illustration; not a photo of a specific place or property.

Checklist

Before you sign a first lease

Rent comps for similar units nearby
Full monthly cost including reserve and vacancy
Move-out date recorded for the IRS 2-of-5 test
Loan occupancy clause checked with your lender
HOA leasing rules and any cap
Insurance switched to a landlord (dwelling) policy
Seattle rental registration, if the home is in Seattle
Written lease and move-in condition checklist that follow RCW 59.18

Rent or sell FAQ

Can I keep the tax-free sale if I rent my home for a while?

Possibly. The IRS test looks at ownership and use as a main home for two of the five years before the sale, so a short rental period may still qualify. Depreciation claimed while renting is generally taxable on sale. Confirm with a tax adviser using IRS Publication 523.

Do I need a different insurance policy?

Yes. A homeowner policy generally assumes you live there. Tell your insurer and switch to a landlord or dwelling policy; condo owners also need to check the HO-6 vs master policy split.

How much can I raise rent in Washington?

Washington adopted statewide limits on annual rent increases and notice requirements in RCW 59.18, with exemptions for some newer buildings. Read the current statute before planning increases.

Is renting my condo a good investment?

Only if the numbers work after every cost. Many starter condos have high HOA fees that make cash flow negative; in that case selling and using the equity elsewhere is often stronger.

Sources

Last checked November 13, 2026. Official sources for the key rules on this page; they describe general rules, and your contract, lender, tax adviser, association documents and each agency's current rules control your specific case.

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Moving up and unsure whether to keep your first home?

Tell us the address. We will pull rent and sale comps, estimate cash flow and net proceeds side by side, and point out which tax and HOA questions to take to your adviser.

Compare rent vs sell