Should you sell your house and rent in retirement? It can be a smart move if you want to free up equity, cut maintenance and gain flexibility, and if your budget can absorb rising rent. It's usually a weaker fit if you plan to stay in place long term, want predictable housing costs or hope to pass the home to heirs.
Two Arizona facts shape the math. First, the IRS lets you exclude up to $250,000 of gain ($500,000 on a joint return) on a main home that meets the ownership and use tests. Second, Arizona preempts rent control under A.R.S. § 33-1329, so private-market rent can rise at renewal.
Data note: Tax rules come from IRS Topic No. 701 and rental rules from A.R.S. §§ 33-1329, 33-1321 and 33-1101, read November 9, 2026. General information, not tax, legal or financial advice.
Selling and Renting in Retirement: Key Facts
- Home sale exclusion: up to $250,000 of gain ($500,000 joint) if you owned and lived in the home 2 of the last 5 years (IRS Topic 701)
- Report the sale: if you receive Form 1099-S, report it even if the gain is excluded
- No rent control: cities, including Scottsdale and Phoenix, may not control private rents (A.R.S. § 33-1329)
- Deposit cap: a landlord can't require more than 1.5 months' rent in security and prepaid rent (A.R.S. § 33-1321)
- Homestead proceeds: Arizona's homestead exemption follows identifiable sale proceeds for 18 months or until you buy a new homestead (A.R.S. § 33-1101)
The Case for Selling and Renting
- Unlock equity. Many long-time Scottsdale and Phoenix owners have significant equity. Turning it into cash can fund retirement income, travel or family goals.
- Shed upkeep. Roofs, AC replacements, pool equipment and yard work shift to the landlord.
- Flexibility. A lease lets you test a new neighborhood, move closer to family or right-size again later without another sale.
- Simpler budgeting for big repairs. You're not exposed to a surprise five-figure system replacement.
The Case for Staying (or Buying Smaller)
- Rent can rise. With rent control preempted statewide, private rents reset at renewal. A fixed mortgage payment, or no mortgage at all, is predictable in a way rent isn't.
- Property tax relief for owners. Qualifying Arizona seniors can apply to freeze their home's valuation. See Arizona's senior property tax freeze.
- Inheritance. Heirs may value the home itself. An Arizona beneficiary deed can pass it outside probate.
- Control. Owners decide on pets, renovations and how long they stay.
A middle path many retirees choose: sell the larger home and buy a smaller one, often for cash, to free up equity while keeping ownership.
Run the Numbers: A Simple Framework
1. Estimate your net proceeds
Start with a realistic sale price, then subtract your mortgage payoff and costs of sale. Our cost to sell a house in Arizona breakdown helps.
2. Check the tax picture
Under IRS Topic 701, you generally qualify for the exclusion if you owned the home and used it as your residence for at least 24 months of the 5 years before the sale. Joint filers can exclude up to $500,000 if either spouse meets the ownership test and both meet the use test. Long-time owners with big gains should read Arizona capital gains tax on a home sale and talk to a CPA.
3. Compare annual housing costs
Add up what owning costs you today: property tax, insurance, HOA, utilities and a realistic maintenance reserve. Compare that with rent plus renter's insurance. Then stress-test rent increases over 5, 10 and 15 years, because Arizona law doesn't cap them.
4. Model the equity
What would the net proceeds earn if invested, and how much would you draw each year? This is where a financial planner earns their fee.
5. Decide on time horizon
The longer you expect to stay in one place, the more owning tends to favor stability. The shorter, or the less certain, the more renting's flexibility is worth.
Renting in Arizona: What to Know Going In
- Deposits: capped at 1.5 months' rent (A.R.S. § 33-1321); nonrefundable fees must be designated in writing
- Move-in form: landlords must give you a signed lease and a move-in form to note existing damage
- Lease length: a longer lease can lock in rent for a longer stretch
- Our deep dive: Arizona security deposit law
“Some of the most thoughtful conversations I have are with clients deciding whether their next chapter includes a mortgage, a lease or neither. I bring the sale numbers and the rental market realities to the table. Their planner and CPA bring the rest. The best decisions I've seen come from running all three together, not from a rule of thumb.”
— Elizabeth Vijan, Tackett Team, eXp Realty
Frequently Asked Questions
Should I sell my house and rent in retirement?
It can work if you want equity, flexibility and less upkeep and can absorb rent increases. It's a weaker fit if you want long-term stability or plan to leave the home to heirs.
Do I pay taxes when I sell my house in retirement?
You may exclude up to $250,000 of gain ($500,000 joint) if you meet the 2-of-5-year tests (IRS Topic 701).
Is there rent control in Arizona?
No. A.R.S. § 33-1329 preempts local rent control on private housing.
How much can an Arizona landlord charge for a security deposit?
No more than 1.5 months' rent in security and prepaid rent combined (A.R.S. § 33-1321).
Weighing a Retirement Move in Scottsdale or Phoenix?
I'll prepare a net-proceeds estimate for your home and a side-by-side look at buying smaller versus renting, so you and your advisors can decide with real numbers.
Elizabeth Vijan | Tackett Team, eXp Realty
Scottsdale & Phoenix Real Estate Specialist
Talk With Elizabeth · Call or text 602-885-7752
Sources: IRS Topic No. 701: Sale of Your Home · A.R.S. § 33-1329: Regulation of rents · A.R.S. § 33-1321: Security deposits · A.R.S. § 33-1101: Homestead exemptions
Disclaimer: General information only, not tax, legal or financial advice. Consult a CPA, financial planner or attorney about your situation. Information deemed reliable but not guaranteed. Equal Housing Opportunity.
Tackett Team, eXp Realty · Get in touch