Struggling with refinance and tax implications

[Leo Gertner]

Hey all, long time listener, first time caller.

My family has to move out of state for my wife's job and we're going to rent out our primary home. It's in Maryland in an area that's been appreciating a lot, so we hope to hold onto it for 3 years (we've been in it for 2). But we have a 15 year mortgage and rents in our area will leave me with at the very least $300 negative cash flow, even before maintenance (it's a new house, shouldn't be too bad). I also have a really low rate, 2.75. I'd have in the order of $6000 in losses each year. I could handle it by cutting back on retirement savings a bit.

Looking around at rates, it seems I could get a 5/1 for 3.625 or so. That would allow me to easily rent closer to a fair market rate and take in about $500 a month. In three years, the difference in equity however would be about 45k less. So in my calculations, I'd have about as much positive cash flow as I would have in negative under the other scenario.

I'm struggling with whether it's really bad to take on those losses or if it's foolish to give up fast-growing equity in the house. And I'm wondering if I'd even get any benefit from the suspended losses if I keep my current mortgage (I have no other passive income to speak of) if I sell and don't make more than $500,000 in profits (which I assume would be protected and I won't go over).

Am I overthinking this and it doesn't really matter either way? Any thoughts are appreciated!