[Dueller]

Let's look at real numbers...you paid 68K 5 years ago on a 30 year fixed...loan balance is probably around 63K (unless you've doubled up or paid extra towards principal). So at $120K you'll net $46K after closing costs (I'm figuring 6% realtor's commission of $7200 plus some other closing costs).

If you have been declaring it as rental property on your tax returns and depreciating it for the tax breaks you'll likely have to pay capital gains on maybe $40K or so. Thats another $6K you'll lose...so your net "profit" will be $41K-ish. This doesn't account for payments you made along the way.

If you need the $41K or so net then sell it. If you need the deduction of rental property for tax purposes AND can cash flow it,then keep it.

Another way of looking at it. If you had $40K or so in the bank, would you buy this piece of proeprty as a rental investment to get the passive income and tax breaks and appreciation long term? If so, keep it. If not, sell it.