Renovate or move?

Five high-leverage inputs most renovate-or-move calculators skip: (1) your current mortgage rate vs prevailing new-loan rate — the single biggest swing factor in 2026; (2) cost of selling at ~9% all-in (realtor + closing); (3) cost of buying replacement at ~3% closing + moving; (4) your capital-gains exemption status ($250K single / $500K married — most homeowners are exempt but high-equity owners aren't); (5) property-tax basis reset multiplier on moving (huge in California Prop 13, Texas, Florida homestead-cap states).

PATH A (renovate-and-stay): renovation cost up-front + opportunity cost on the capital + continuing existing mortgage + property tax + 1%/yr maintenance, minus net sale proceeds at the horizon year (using 70% renovation recoup at sale — Remodeling Magazine 2026 averages). PATH B (sell-and-move): net proceeds from selling current home (after cap gains tax + 9% selling costs) used as down payment on the replacement home → new mortgage at prevailing rate + reset property tax + maintenance, minus net sale proceeds at horizon. Both paths assume you ultimately sell — so the math is total cost of ownership over your stay horizon, not a one-shot move-in cost.

Three reasons stack up against moving in 2026: (1) Rate lock — most owners are sub-4% on their current mortgage while prevailing 30-yr is 7%+, so trading down a $300K balance from 3.5% to 7.25% adds ~$700/month for 30 years = ~$250K of net carrying cost; (2) Selling + buying costs are ~12% combined of two-side transaction value = $50K-$80K on a $500K home; (3) Property tax basis reset in California (Prop 13) and homestead-cap states can 2-4× your tax bill. Stack those and renovate wins for most homeowners with locked-low rates — even when the renovation itself is expensive.

Moving wins in five scenarios: (1) Your current home is structurally wrong (commute, school zone, square footage gap) and no renovation fixes it; (2) You bought after 2022 at a high rate and prevailing rates have dropped — no rate-lock advantage to preserve; (3) Major life event (retirement, downsize, job relocation) — emotional + lifestyle value dominates the financial math; (4) Renovation costs would exceed 25% of home value — over-improvement territory, you'll never recoup; (5) Your local market has appreciated enough that selling today nets you well over the cap-gains exemption AND you can buy comparable cheaper elsewhere.

When the 5/10/20-year cost gap between the two paths is under 5% (typically ±$20K-$50K on a typical-priced home), the financial math is a wash — and other factors should decide: commute time, school zone, walkability, family proximity, emotional attachment to the house. The calculator surfaces this verdict so you don't agonize over a 3% difference when the lifestyle delta is what actually matters.

Yes — 3%/year inflation on property tax and maintenance, 3.5%/year home appreciation (US long-run average). The 'opportunity cost' input on the renovation capital is treated as a separate compound — set to 7% to compare against S&P 500 returns, 4% for safe Treasuries, or 0% if you'd otherwise spend the money. We use a constant 0.18 effective federal long-term capital-gains rate (15% statutory + 3.8% NIIT for typical brackets) on any gain above the federal exemption.

Use this to gut-check direction and bracket the dollar magnitude. Real-world decisions need a 30-min call with a CPA on the cap-gains piece, a written CMA from a local agent on actual sale price (not the 3.5% appreciation formula), and a mortgage broker on what rate you'd actually qualify for. The calculator gets you to the right 70% answer in 2 minutes — the last 30% is professional advice.