Keep Property

Holding the property means you continue to collect rental income and benefit from property appreciation. This analysis assumes you hold the property for the specified years, collecting annual cash flow and eventually selling at the appreciated value.

Best when: Property cash flows well, appreciation outlook is strong, and you're satisfied with the current investment performance.

Sell Now (Pay Taxes)

Selling triggers capital gains tax on the appreciation and depreciation recapture tax on the depreciation you've claimed. The calculator assumes 80% of the purchase price was depreciable building value (depreciated over 27.5 years for residential rental property).

Best when: You need liquidity, want to diversify investments, or the after-tax proceeds can be reinvested for better returns elsewhere.

1031 Exchange

A 1031 exchange allows you to defer capital gains and depreciation recapture taxes by reinvesting proceeds into a "like-kind" property. You must identify replacement property within 45 days and close within 180 days. Transaction costs typically include qualified intermediary fees, legal costs, and other expenses.

Best when: You want to upgrade to a better property, consolidate or diversify holdings, or continue building wealth through real estate without the tax burden.

Important Considerations

• Depreciation: This calculator assumes straight-line depreciation of the building value (80% of purchase price) over 27.5 years.
• Tax Rates: Capital gains rates depend on your income level. Consult a tax professional for your specific situation.
• 1031 Rules: Strict timelines and rules apply. Work with a qualified intermediary and tax advisor.
• Market Assumptions: Future appreciation and rental income are estimates. Actual performance may vary.
• Transaction Costs: Selling costs (agent commissions, closing costs) are not included in this basic analysis.
• Financing: This analysis doesn't account for mortgage payments, refinancing, or leverage strategies.