Renting Under SF Rent Control and Planning Your Eventual Sale

Updated 2026-10-24, 6 minute read

The moment a tenant moves into any part of your San Francisco property, you are a landlord under one of the strictest local ordinances in the country. The moment you list the home for sale, roughly 6% of the price goes to commissions, transfer tax and preparation. Here is what rent control and just cause mean for an owner, the tax picture, what selling costs here, and how to time it.

Is your unit covered?

Two separate protections:

Protection	Who it covers in SF	Key exceptions
Rent increase limits (rent control)	Units in buildings with a certificate of occupancy before June 13, 1979	Single-family homes, condos and new construction (including state-path ADUs) are exempt under the state Costa-Hawkins Act
Just-cause eviction protection	Every residential rental unit in the city, since Ordinance 296-19 took effect in 2020	A landlord who shares the unit with the tenant may end the tenancy without a just cause; confirm with the Rent Board

The state's Tenant Protection Act adds its own cap of 5% plus CPI, never more than 10%, for buildings more than 15 years old; an individual owner of a house or condo is exempt only by giving the tenant the required written notice. For an ADU, the permit path decides; TIC conversion and ADUs explains.

What coverage means in practice

Allowable increases. For rent-controlled units, a figure the Rent Board sets each year at 60% of the Bay Area CPI change, announced at 1.6% for March 1, 2026 through February 28, 2027 (check the current rate), and only after you register the property in the Rent Board's housing inventory and hold a rent increase license.
Just cause. You can end a tenancy only for a listed reason such as non-payment, breach, nuisance, an owner or relative move-in or the Ellis Act. An owner move-in requires at least a 25% ownership interest, a genuine intent to live there for at least 36 months, notice filed with the Rent Board, and relocation payments of $8,245 per tenant up to $24,733 per unit for notices served March 1, 2026 through February 28, 2027, plus $5,497 for each tenant who is 60 or older, disabled, or living with a minor child (the Rent Board resets these amounts every March 1; check its current rates page); protected tenants can block it entirely. Buyouts are regulated under Section 37.9E and commonly run into the tens of thousands per tenant.
Deposits. Capped at one month's rent for most landlords under state law, with interest payable at a rate the Rent Board sets each year.

Buying a tenant-occupied home covers the same rules from the buyer's side.

Renting a room, an in-law, or short term

Renting a room in the home you live in is the lightest version of landlording, since the shared-unit exception above applies. An in-law with its own entrance is a separate unit with full just-cause protection, rent control if the building is covered, and the legality question if it was never permitted. Condo CC&Rs may require minimum lease terms. The city requires short-term rentals to be registered, limits them to your primary residence and caps un-hosted nights; as of 2026-10-24, check the current rules first.

Screening, leases, insurance and taxes on rent

Screening and lease. Apply the same written criteria to every applicant, use a current California lease form with the Rent Board's required notices, and keep rent ledgers and signed addenda from day one, since a buyer's lender will later want a tenant estoppel certificate that matches your records.
Insurance. A homeowners policy generally does not cover a rented property. Switch to a landlord policy with loss-of-rent coverage and tell your umbrella carrier; insurance and maintenance covers the annual review.
Taxes. Rental income and expenses go on Schedule E; you depreciate the building (not the land) over 27.5 years, which lowers taxable income now and is recaptured at up to 25% when you sell; interest, property tax, insurance, repairs and management fees are deductible against rent.

The capital gains exclusion and depreciation recapture

Federal law excludes up to $250,000 of gain on the sale of your main home, $500,000 on a joint return, if you owned and lived in it for at least two of the five years before the sale, and California conforms. Gain above the exclusion is taxed at long-term capital gains rates of 0%, 15% or 20%, plus the 3.8% net investment income tax above $200,000 of income single or $250,000 joint, and California taxes it as ordinary income at rates up to 13.3%.

Renting changes the math in two ways. Depreciation you claimed is recaptured at up to 25% federally and is never covered by the exclusion. And the two-of-five-year test keeps running: move out, rent for up to three years and sell inside year five and the exclusion survives; stay a landlord longer and it is gone. California also requires escrow to withhold part of the price from sellers who do not claim an exemption such as the principal-residence one. IRS Publication 523 has the details, and mortgage interest and SALT covers the deductions while you live there.

Cost basis: why your receipts file is worth real money

Gain is sale price minus selling costs minus adjusted basis, and basis is where owners leave money on the table. It includes the purchase price, most buyer-side closing costs (title, escrow, recording) and every capital improvement: a new roof, a retrofit, a rewire, a kitchen, an ADU, a legalized unit, but not repairs. On a $1.5 million purchase with $200,000 of documented improvements and $30,000 of closing costs, basis is $1,730,000. Keep the closing package, permits and invoices in one folder.

What selling costs in San Francisco

Item	Typical in SF	Notes
Listing agent fee and buyer-agent concession	A total in the 5% range is still typical	Fully negotiable since the 2024 settlement; Redfin's second-quarter 2025 data put buyer-agent fees at 2.43% nationally and about 2.2% on homes over $1 million
SF transfer tax	0.68% from $250,000 to under $1 million; 0.75% from $1 million to under $5 million	Paid by the seller by local custom; higher brackets above $5 million
Disclosure package	3R report, pest and general pre-inspections, often a sewer video, natural hazard report	SF custom is to front-load these so buyers can write without contingencies
Preparation and staging	Paint, floors, landscaping, staging	A few thousand dollars on a condo to much more on a house

Add the HOA document fee and the seller's smaller share of escrow and recording, and call it 6% to 6.5% all-in, around $90,000 to $100,000 on a $1.5 million sale before repairs or credits. The commission is the line you negotiate, but preparation and pricing decisions move the result by more than the fee; why list prices are low explains the strategy you will be on the other side of. If you buy your next home with one of this site's agents, the buyer-side commission on that purchase is how the site is paid; nothing here changes based on whom you list with.

Timing, Prop 19, sell vs rent out, and a yearly review

Data over season. Pull closed sales for your building type in the comps tool and compare them with your basis and loan balance; sell when the net clears what you need.
Prop 19. If you are 55 or older, you can carry your factored base-year value to a replacement home anywhere in California, up to three times. Prop 13 and Prop 19 covers the rules.
Sell vs rent out. Renting means just-cause rules, a landlord policy, management time and, after three years away, the loss of the exclusion; compare the net rent after dues, tax, insurance and vacancy with what the sale proceeds would earn.
A yearly review. Each January: update the improvements file, snapshot comps, and note the two-of-five-year clock.

What to shop for right now

A property manager is medium: fees vary widely, and a leasing-only service often beats full management for one unit. Landlord insurance is medium: carriers price the conversion very differently, so quote it with the homeowners renewal. The listing agent is high: the fee and the buyer-agent concession are contract terms, and a half point on an SF sale is thousands of dollars.

Shop for this now

Service	When	Savings from shopping	How to shop it
Property manager	Before you list the unit for rent, once you have decided not to self-manage	Medium: worth 2-3 quotes Fees range widely as a percentage of monthly rent and in separate leasing charges, and for a single unit a flat-fee leasing-only service with you handling the rest is often the better buy. As of 2026-10-24, quotes are the only reliable figures.	Get proposals from two full-service managers and one leasing-only service, and compare the monthly percentage, the leasing fee, renewal fees, maintenance markups and who holds the deposit; ask each how they handle Rent Board registration and annual increases.
Landlord insurance	Before the tenant moves in; a homeowners policy generally does not cover a rented property	Medium: worth 2-3 quotes Converting to a landlord policy is priced very differently by carrier, and the gap between quotes for the same unit is often a meaningful share of the premium; quoting it beside the homeowners renewal costs nothing.	Quote a landlord (dwelling fire) policy or a rental endorsement from your current carrier and through an independent broker at your homeowners renewal, with loss-of-rent coverage and liability limits matched to your umbrella.
Listing agent (when you sell)	Three to six months before you plan to list	High: shop it hard Listing commission and any buyer-agent concession are negotiable, and on an SF sale a half point is thousands of dollars; Redfin's second-quarter 2025 data put buyer-agent fees at 2.43% nationally and about 2.2% on homes over $1 million, and the pricing and preparation decisions an agent makes move the sale price by far more than the fee.	Interview three agents with recent sales of your property type nearby, compare their pricing strategy against closed comps, their preparation plan and budget, and their proposed listing fee and buyer-agent concession, all of which are negotiable contract terms; get the net-proceeds estimate from each in writing.

Frequently asked questions

Can I rent out my condo in San Francisco?

Usually, subject to three layers of rules. Your CC&Rs may set minimum lease terms or a cap on the share of rented units, and California law lets associations ban leases shorter than 30 days. The city requires short-term rentals to be registered and caps un-hosted nights. And once you have a tenant, San Francisco's just-cause eviction rules apply to every residential unit regardless of age or type, so you need a lawful reason to end the tenancy; the rent increase limits do not apply to a condo under the state Costa-Hawkins Act, but the state's separate cap of 5% plus inflation can, depending on how you hold title and the notices you give.

Is my single-family home subject to rent control in SF if I rent it out?

Not to the rent increase limits, because Costa-Hawkins exempts single-family homes and condos from local rent control; a separate state cap of 5% plus inflation, up to 10%, applies unless you own the home as an individual and give the tenant the required exemption notice. Just-cause protection is a different matter: since 2020 every residential rental unit in San Francisco is covered, so you can only end the tenancy for a listed reason such as an owner move-in with relocation payments. If you rent a room in the home you live in, the ordinance allows a landlord who shares the unit with the tenant to end that tenancy without a just cause; confirm the current rule with the Rent Board.

How much can I raise rent in San Francisco each year?

For a unit covered by rent control, meaning a building with a certificate of occupancy before June 13, 1979 that is not a single-family home or condo, the allowable annual increase is set each year at 60% of the Bay Area CPI change, announced at 1.6% for March 1, 2026 through February 28, 2027 (confirm on the Rent Board's current rates page), and you must register the property with the Rent Board's housing inventory and hold a rent increase license before imposing it. For units outside local rent control, the state cap of 5% plus CPI, never more than 10%, generally applies to buildings more than 15 years old unless an exemption applies. Check the Rent Board's current rates page each March.

How much capital gains tax will I pay when I sell my house in California?

If you owned and lived in the home as your main residence for at least two of the five years before the sale, up to $250,000 of gain is excluded from federal tax, or $500,000 on a joint return, and California follows the same exclusion. Gain above that is taxed at federal long-term capital gains rates of 0%, 15% or 20%, plus the 3.8% net investment income tax above $200,000 of income single or $250,000 joint, and California taxes it as ordinary income at rates that reach 13.3%. Depreciation you claimed while renting the home is recaptured at up to 25% federally and is not covered by the exclusion.

How long should I live in a house before selling?

Two years as your main residence is the tax floor, because that is what qualifies you for the capital gains exclusion. Financially, San Francisco transaction costs run about 2% to buy and roughly 6% or more to sell once the commission, the city transfer tax and preparation are counted, so most owners need several years of appreciation just to break even; the rent-vs-buy math in this guide puts that at five to seven years in typical cases. Sell sooner only when life requires it, and run the net against recent closed sales rather than list prices.

How much does it cost to sell a house in San Francisco?

Plan on roughly 6% to 6.5% of the price. A total commission in the 5% range is still typical even though every part of it is negotiable after the 2024 settlement; Redfin's data for the second quarter of 2025 put the average buyer-agent commission at 2.43% nationally and about 2.2% on homes over $1 million. The city transfer tax, paid by the seller by local custom, is 0.68% from $250,000 to under $1 million and 0.75% from $1 million to under $5 million. Add the 3R report, pre-listing inspections, the HOA document fee, staging and prep, and escrow and recording charges. On a $1.5 million sale that is around $90,000 to $100,000 before any repairs or credits.