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.
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).
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.
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.
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.
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.
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.
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.
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.
Selling your home because of PCS offers several benefits that can give you peace of mind during what can often be an overwhelming time:
For some, selling a house during PCS is more hassle than it’s worth:
Renting out your home during PCS can be a great way to avoid the inconvenience of selling. It can also offer:
Not everyone wants to take on landlord responsibilities while navigating life in the military, which include:
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.
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.
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:
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.
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.
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.
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].