Is It a Good Idea to Sell My House or Rent It out in NYC?

Why Should I Rent vs Sell My Home?

Can you afford to purchase a new home without needing to sell your current home? If so, you should seriously consider renting vs selling your home. By doing so, you can avoid high closing costs in NYC that can range up to 8% or 10% of your sale price if you’re selling a condo or co-op with a building flip tax.

Furthermore, the tax code heavily favors investment properties and landlords vs primary and secondary residences. In fact, the IRS treats each investment property as an individual business where all of the associated business expenses can be written off against revenues. This means your NYC real estate taxes, your common charges or maintenance fees, any special assessments levied by your building, your home owner’s insurance premium, your mortgage interest and any maintenance or repair costs.

Furthermore, landlords can depreciate residential properties fully over 27.5 years. This benefit is huge because it means landlords can depreciate a condo or co-op by approximately 3.6% every year until it has been fully depreciated. This equates to an approximately 3.6% non-cash, paper loss every year.1 Given the low cap rates in Manhattan and other hot areas in NYC, it’s no wonder that most professional landlords have a “loss” on their properties year after year.

Lastly, if you qualify as a “real estate professional” in the eyes of the IRS, then you can offset an unlimited amount of losses from rental property activity against your other active income. This really means there are some landlords out there who have a negative income tax liability year after year! Not to worry, even if you don’t qualify as a real estate professional according to the IRS, you can still offset $25,000 of active income from your rental property losses as of today.

Pro Tip: Learn more about depreciation and other tips on becoming a landlord in our guide to buying investment property in NYC. Estimate your closing costs when you sell with our Closing Cost Estimator for Sellers in NYC. Estimate your closing costs when you buy your rental property with our interactive Buyer Closing Calculator for NYC.

Fees to Rent vs Sell Your Home

Most New Yorkers won’t have the privilege of owning free-standing property, meaning they’ll have a condo or co-op apartment and lots of neighbors in their building. This also means most New Yorkers won’t be able to freely rent out their apartment at a whim. Most co-op buildings have sublet rules and fees, if subletting is allowed at all. Condo buildings almost always allow the owners the right to rent out their individually owned apartments; however, many condo buildings will still have some sort of rental application and processing fee.

You should be especially carefully about deciding to rent vs sell if you have a co-op apartment because co-ops will generally have strict sublet policies designed to favor owner occupancy.

NYC Coop Sublet Policy, Rules and Fees — What are the Rules and Fees for Subletting a Co-op in NYC?

Co-op Sublet Policies

Many co-op buildings will only allow a shareholder to sublet their apartment after a certain number of years of primary residency. Most co-ops will only allow a certain number or maximum number of years of subletting before the owner is required to occupy the apartment again. It’s also not unusual for co-op apartments to have hefty sublet fees that can be a substantial percent of the rental income.

Pro Tip: Calculate your rental property income, cap rate and cash on cash returns and yields with our handy Rental Property Calculator designed for NYC.

When Should I Sell My House in NYC?

Do you need the money from selling your current home in order to purchase a new home? If so, then you will have little choice but to sell your house or apartment. The truth is not everyone has the money saved up to be able to play landlord when they need to upgrade to a bigger apartment or move due to job changes.

What if you have no desire to be a landlord? If you’d rather stick with stocks and value convenience over any tax savings, then it may make complete sense to sell vs rent out your property. Furthermore, with stocks you’ll never have to worry about the boiler leaking or evicting a bad tenant. This may be the best path for someone who’s more of a digital nomad and doesn’t want to be tied down with responsibilities in a certain place.

Will renting out your apartment generate positive cash flow? You should ask your neighbors what they were able to rent their homes for and you should also look online to see where similar units in your building and neighborhood are being listed for. Will the anticipated rental income cover your expenses of maintaining the property? Don’t forget to budget for unexpected building special assessments and repairs and maintenance. If the property won’t generate enough rental income to cover your expenses, then you may not be comfortable with holding onto it despite the tax benefits. If you’re simply not comfortable with holding onto an asset with negative cash flow, then it may be best to simply sell it and monetize your home equity.

Pro Tip: Do you anticipate ever moving back? For example, if you’re only temporarily re-locating to another city for a few months or a year, then it may not make sense to sell your home at all if you’ll want to move back in down the road. In this case, it may make the most sense to rent out your home, or to even leave it empty if you can’t bear the thought of someone else living in your space.

Should I Sell My House and Rent?

Selling your house and renting may make sense if you don’t plan to be in one place for too long and you don’t want to be tied down. For example, if you’re getting ready for retirement and want to travel the world in perpetuity, then yes it might make complete sense to sell your home and rent before you iron out your travel plans.

Alternatively, it may also make sense to sell your house and rent if you’re facing financial difficulties and cannot afford to maintain your house or apartment. In this case, it may be more prudent to downsize and rent a smaller apartment that you can more easily afford. This isn’t a pleasant option for most people, but it’s certainly better than being in foreclosure. If you think that you’ll default on your mortgage in the near future, it’s better to sell now rather than later when you’ll be more desperate and vulnerable.

Lastly, it may simply make sense to sell your current home and rent if you have a great deal on a rental, perhaps from a friend or family member. Or perhaps you’re moving in with someone who has a rent controlled or rent stabilized apartment. If it’s big and nice enough, then it may make way more sense to move in and to sell your old home.

Pro Tip: You might as well get an idea what what you’ll be able to afford if you do sell and buy a new home. Get a pre-qualification letter from your mortgage broker or bank if you’re just window shopping. Once you become more serious, it’s time to get a mortgage pre-approval letter. Learn more about the mortgage underwriting process and how it all works in our overview of the NYC mortgage process.

Can I Sell My House and Rent It Back?

Yes. This is called a residential sale leaseback transaction and is most commonly utilized by sellers who want to stay post occupancy, typically for a limited period of time before they close on their new property.

Often times the rental fee that is negotiated will simply be the seller’s current carrying charges. This typically means the seller’s mortgage payment and monthly common charges or maintenance fees.

Post-Closing Possession Agreement — How Does Post-Closing Possession Work in NYC Real Estate?

Sale Leaseback

It is more unusual to see a situation where the seller wishes to sell and then rent their home as a tenant long term. While sale leaseback transactions often make sense in a business context because businesses can write off lease payments as business expenses, tenants cannot do so for rent payments for the apartment they live in. As a result, it typically doesn’t make sense to do so unless you have negotiated a great, long term rate or are planning to move in the near future.

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Disclosure: Hauseit ( and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The services marketed on are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).




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Save money when buying and selling real estate in NY and FL with Hauseit. Available in NYC, Long Island, the Hudson Valley and South Florida.

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