Convert to a Rental or Sell: How NYC Owners Should Decide

Manhattan's median asking rent hit $5,000 a month in February 2026, an all-time high according to Corcoran's rental market report, while Brooklyn's median asking rent reached $4,296 the same month. Numbers like that are exactly why an owner who is relocating out of a New York City home starts asking whether to rent or sell the place they are leaving behind instead of just listing it.

In my 25+ years selling NYC real estate across all five boroughs, this is one of the most common calls I get from an owner who is moving, not just cashing out. The rent number alone rarely settles it. What settles it is the carrying-cost math underneath that rent, what your specific building allows, and what the tax clock does to your numbers if you wait.

One note on scope before the framework: this article assumes you already own the home and are deciding what to do with it. If you are instead deciding whether to rent or buy in NYC in the first place, that is a different question with a different answer, and I break down that calculation separately in my rent vs. buy break-even guide.

What the Rent Actually Has to Cover

The rent figure alone tells you almost nothing. What matters is what is left after your carrying costs, and NYC carrying costs run higher than most first-time landlords expect. The table below is an illustrative example, not a specific property, but it shows the arithmetic every owner needs to run against their own building's actual numbers.

That $300 leasing and management line covers tenant screening, lease preparation, and, if you hire a broker to bring the unit to market, a market-rate leasing fee. Owners who skip that reserve and only compare rent to their mortgage payment routinely overestimate what renting actually nets them. Run this table with your building's real maintenance or common charges, your real mortgage balance, and a realistic asking rent for your line before you decide anything.

The one number most owners guess at is the top line. Do not guess it. My owner rental page carries median asking rents by neighborhood and bedroom count, with the listing count each figure is based on and the year-over-year change, sourced and dated so you can see whether your building's line supports the rent your math needs. If it does, that page is also where I take on owner-side rental listings. If it does not, the rest of this article is the more useful half.

Getting the Unit Back Later

Renting is not a decision you can undo the moment you want to sell with the unit empty. New York's Good Cause Eviction law changed what it takes to end a covered tenancy, and that affects owners who plan to rent for a few years and then sell vacant or move back in themselves.

The short version: a buyer pool that wants to move in themselves will not compete for a unit they cannot occupy on the date they need it. If vacant possession matters to your future sale, build the lease term and any renewal decisions around that exit date from day one, not after you already have a tenant in place.

If It Is a Co-op: The Sublet Clock Runs Out

Most NYC co-op proprietary leases do not treat subletting as a right you can exercise whenever you want. Common co-op sublet policies allow subletting for only 2 years out of every 5, require 1 to 2 years of owner occupancy before you can rent at all, or ban subletting outright once you are no longer living there yourself. Boards that do allow it often charge a sublet fee on top of the standard application, and renewals past the first year typically need a fresh board sign-off.

If your unit is a co-op, read the proprietary lease and house rules before you assume renting is even an option. In some buildings it simply is not, or it is only available for a window short enough that it does not solve the problem you are trying to solve.

Recently Listed in NYC

Live data · Updated every 15 min · Source: REBNY RLS

View All

Active

$1,695,000

159 W 53rd Street #34E

Midtown

2 bd 2 ba 1,214 sf

View Details Tour

Condo · 1968 RLS #RLS20079245

Active

$3,145,000

212 W 72nd Street #10-C

Lincoln Square

3 bd 2 ba 1,425 sf

View Details Tour

Condo · 2008 RLS #RLS20091137

Listing information provided courtesy of the Real Estate Board of New York's Residential Listing Service (RLS). Information is deemed reliable but not guaranteed. Sale listings verified. ©2026 REBNY. RLS data displayed by Keller Williams NYC.

If It Is a Condo: More Room to Rent, Still a Cost

Condominiums generally allow subletting without the occupancy waiting periods co-ops impose, which is the main reason investors gravitate toward condos over co-ops for rental income. Most condo boards still charge a sublet or leasing fee, commonly in the $500 to $1,500 per year range, set by the building's bylaws and house rules rather than by state law.

That condo sublet fee is separate from, and should not be confused with, Real Property Law 238-a, which governs the background and credit check fees a landlord charges a prospective tenant during that tenant's rental application. The condo fee is a building-association charge for your right to lease your own unit. The 238-a fee is a screening cost tied to the specific person applying to rent from you. Budget for both if you are turning a condo into a rental.

The Tax Clock: Section 121 and Depreciation

Section 121 of the federal tax code lets a homeowner exclude up to $250,000 of capital gains on the sale of a primary residence, or $500,000 for a married couple filing jointly, but only if you owned and used the home as your primary residence for at least two of the five years before closing. That five-year window keeps running from the day you move out, whether you rent the unit, leave it empty, or move in a family member.

In practice, that gives most owners roughly a three-year window after converting to a rental to sell and still qualify for the full exclusion, since two years of prior residence plus three years of renting lands you right at the edge of the five-year lookback. Wait longer than that to sell and you can fall outside the two-of-five-year test, which puts the exclusion at risk. The exact math gets more complicated if you already used part of the exclusion on a previous sale, so confirm your specific timeline against IRS Publication 523 with a CPA before you sign a lease that runs past that window. For the fuller breakdown of what a sale nets you after tax, see my capital gains guide for NYC sellers, my NYC capital gains tax guide, and my seller net proceeds breakdown. To put a number against the rent column above, run your sale price through the seller net proceeds calculator and compare the cash at closing to the monthly cash flow the rental would actually produce.

If you do rent the unit out, the IRS generally requires you to depreciate the building portion of your basis over 27.5 years, which lowers your taxable rental income each year you hold it. That same depreciation reduces your cost basis and gets recaptured at sale, at a federal rate of up to 25%. The interaction between depreciation recapture and the Section 121 exclusion is exactly the kind of math a CPA should run against your actual numbers before you decide to hold and rent rather than sell now.

Rent It Out or Sell: Side by Side

Neither column is the right answer for every owner. An owner who might return to the city in two years and whose building allows subletting freely has a very different calculation than one in a co-op that caps sublets at two years out of five, or one who is three years past moving out and about to lose the Section 121 exclusion entirely. Run your building's actual sublet rules, your actual carrying costs, and your actual tax timeline before you decide, and get your CPA and attorney involved before you sign a lease or a listing agreement.

There is a third path this framework leaves out, and it comes up often enough to name. Some owners are not choosing between renting the place out and cashing out; they are moving to a smaller home in the city and need the sale and the purchase to line up. That is a sequencing problem rather than a rent-versus-sell problem, and I cover the timing, the board package on the buy side, and the bridge options in my guide to moving to a smaller NYC home.