A Permanent Change of Station (PCS) order is part of life in the military. For servicemembers who own their homes, a PCS often means making a tough decision: do you sell your house, or rent it out?

Armed Forces Mutual is here to provide a full breakdown of each option so you can make the right choice for your family.

Financial Considerations of a Military PCS Transition

Unlike temporary duty assignments, which are shorter in duration, PCS orders are typically long-term assignments that can last anywhere from two to four years. Generally, these orders will indicate your new location, which can be either within the continental United States (CONUS) or outside of it (OCONUS).

• CONUS: Inside the continental United States.
• OCONUS: Outside the continental U.S., including Alaska, Hawaii, and U.S. territories.

Your orders include important information related to your authorizations and entitlements, and you’ll need a copy of your orders to coordinate your military move.

Your PCS transition introduces several important financial considerations. While the military covers some of your moving expenses, you’ll still need to budget for certain out-of-pocket costs such as temporary lodging, meals, vehicle maintenance, and housing-related fees. 

You’ll also need to decide whether to sell or rent out your current home. Either decision will significantly affect your finances and responsibilities.

Why to Consider Selling or Renting Your Home Due to Military PCS Transition

Deciding whether to rent out or sell your home during PCS will depend on your financial goals, emotional readiness, and the resources available to you. Let’s look at how these factors can help you make a decision.

Need for Financial Flexibility

Selling your home can provide immediate financial relief via a lump sum that you can use to pay off debts, invest, or cover moving expenses. 

On the other hand, renting out your property can create a steady income stream if you're looking to build long-term wealth. 

Emotional Closure

Moving can be an emotional time as you say goodbye to your current community. Selling your house may provide a sense of closure. If you rent your home, you will have the added responsibilities of being a landlord and having to take care of maintenance, homeowners insurance, and paying for taxes.

However, renting can keep you connected to your previous community, providing more of a sense of continuity as you move forward.

Tax Benefit

As an active-duty servicemember, you may be eligible for specific tax benefits when selling or renting out your home. For instance, if you sell your primary residence, you might qualify for a capital gains tax exclusion, even if you've been away due to military orders. 

Renting out your home also offers potential tax deductions, such as those for depreciation and maintenance expenses. Be sure to check with a tax professional who specializes in military finances can help you understand and take advantage of these benefits.

Military Resources

The military provides various resources to assist with housing decisions during a PCS. Programs like the Department of Defense's Homeowners Assistance Program (HAP) offer financial support for specific groups, such as wounded soldiers. Military OneSource has an entire section devoted to housing support during PCS.

Pros and Cons of Selling or Renting Out Your Home Due to Military PCS Transition

We briefly discussed the factors that may come into play as you decide whether to rent out or sell your home during a PCS move. Now, let’s dive deeper into the pros and cons of each.

Pros of Selling Your Home Due to a Military PCS Transition

Selling your home because of PCS offers several benefits that can give you peace of mind during what can often be an overwhelming time:

• Immediate cash for next home purchase: Selling your home can provide a lump sum for a down payment on a new home or to pay off debts.
• Avoiding landlord responsibilities: Managing a rental property can be particularly stressful if you're relocating far away or overseas.
• Capitalizing on a seller's market: If the housing market is favorable, selling your home could result in a significant profit and maximize your return on interest (ROI).

Downsides of Selling Your Home Due to a Military PCS Transition

For some, selling a house during PCS is more hassle than it’s worth:

• Emotional ties: Letting go of a home filled with memories can be emotionally challenging, especially if it's been a significant part of your family's life. This may be something you don’t want to think about right now.
• Dependency on market conditions: The success of selling your home largely depends on the current real estate market. If you have to move during a buyer’s market, you might have to sell at a loss or wait longer for a sale.
• Less long-term upside: By selling, you forgo the potential for long-term property appreciation and the benefits of having a tangible asset in your investment portfolio.

Pros of Renting Out Your Home Due to Military PCS Transition

Renting out your home during PCS can be a great way to avoid the inconvenience of selling. It can also offer:

• Long-term investment potential: Renting out your home allows you to retain ownership, potentially benefiting from property value appreciation over time.
• Passive income stream: A well-managed rental property can provide a steady income that helps cover the mortgage on your new home, pay off debts, or provide extra cash for things like vacations.
• A home to return to in the area: If there’s a chance you’ll be sent back to your current area, you’ll have someplace you can move into immediately.

Downsides of Renting Out Your Home Due to Military PCS Transition

Not everyone wants to take on landlord responsibilities while navigating life in the military, which include:

• Upkeep and marketing: Managing a rental property involves the sometimes costly ongoing maintenance and efforts to keep the property occupied.
• Responsibility to renters: As a landlord, you're responsible for addressing tenant concerns and keeping the property up to code, which can be challenging to do from a distance.
• Liability of potential natural disasters: Owning a property means you're liable for damages caused by unforeseen events like natural disasters.

Things to Know about Selling or Renting Out Your Home During a Military PCS Transition

A PCS involves more than just packing boxes. You must understand the timing, preparation, and legal and financial implications to make informed decisions based on your personal and financial goals.

Understanding the Timing of a PCS Move

PCS orders can arrive with less than 30 days’ notice, or as many as 120 days’ notice before the report date. This variability will impact your housing decisions, so careful planning helps you stay organized.

Once you receive your orders, assess the real estate market conditions in your current location. If the market is favorable, selling might be a better idea; however, in a buyer's market, renting might make more financial sense. A real estate professional in your area can let you know what’s happening in the market and what’s predicted to happen in the immediate future.

Preparing Your Home to Sell

Once you decide to sell your home, it’s time to get it ready for the market. Your real estate agent will help you, but some small things you can do to make it more attractive to potential buyers include:

• Fresh paint on both the exterior and interior.
• Decluttering. Potential buyers like to imagine their own things in a home.
• Landscaping. Mow the lawn, plant flowers, and trim trees or bushes.

Working with a real estate agent and a mortgage lender experienced with military moves can streamline the selling process. They’ll guide you through the nuances of VA Home Loan payoffs and coordinate closing timelines that align with your PCS schedule. 

Preparing Your Home to Rent Out

If you choose to rent out your home, make sure it’s ready for renters by the time you leave for your PCS.

Your first step is to familiarize yourself with local rental regulations, including landlord-tenant laws and property management requirements. The rental price should be competitive yet sufficient to cover your mortgage and associated costs. It might make sense to look into hiring a property management company to take care of the property while you’re away.

Before you move out, fix any maintenance issues, make sure your appliances are in working order, and possibly update certain features to meet rental standards, such as ADA compliance.

Legal and Financial Considerations

Whether you rent out or sell your home, you’re still responsible for the mortgage. If you sell, be aware of any prepayment penalties or specific procedures related to VA Home Loan payoffs. If you rent to tenants, make sure their rent covers your mortgage and other associated costs.

Take time to understand the tax implications, too. Active-duty servicemembers may qualify for a capital gains tax exclusion on their primary residence, even without living in it for two out of five years, due to a military extension that allows for a 15-year look-back period. When renting, you may be eligible for deductions related to property depreciation and maintenance expenses. Always check with a tax professional for guidance.

We’re Here to Help

A PCS can be challenging. Find the support and resources you need to help you during these transitions, from preparing for your move to building a new community. Subscribe for access to all of the content in our Learning Hub, including tips and information on PCS moves and other aspects of military life.

Want to ensure your finances are safe throughout your move and for the future, discover what Armed Forces Mutual can do for you. Or contact a Member Benefits Coordinator today at [email protected].