Buy or Sell In light of Capital Gains Tax?

[Michele Satterlund]

Bought a home for $170,000 in 2010.  We spent $94,780 in capital improvements/renovations before moving out in 2020.  We have been renting the house for the last three years ($27,240.00 annually in rental receipts).  We owe $87K on the mortgage.

Because it was our primary residence, we have until July, 2024 to sell without paying capital gains.  We spoke with a realtor who anticipates a sales price between $475K-$499k.

We can't decide if we should sell and pocket about $377,000 free of capital gains tax or continue renting with cash flow of about $9,500 annually after expenses.  Also, we know we need to purchase a generator at about $10K if we keep the home.

I appreciate any insight.  Thanks!