Option A counts cash after tax today, plus what it could earn parked in a safe account. Option B counts cash flow before income tax on rent. Tax uses ~15% federal + ~9.3% California on gain, 25% + 9.3% on depreciation. Exact tax: T22.
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Next steps
Get real rent comps. Look at 3–5 homes like yours on your street that rented in the last 60 days. HUD numbers are a floor, not your rent.
Write down your move-out date and the window date above. Talk to a CPA before you sign a lease. Read IRS Pub 523 (selling) and Pub 527 (renting).
Renting? Learn the rent cap and eviction rules first: T55. Switch to a landlord insurance policy.
Selling later? Check the exact tax in T22. Want to roll into another rental instead? See T27 — 1031 exchange.
Many people get this wrong: “The rent covers the mortgage, so it's free money.” Not really. Repairs, empty months, tax and insurance come first. And if you sell more than 3 years after moving out, you can lose up to $250K/$500K of tax-free gain.