PCSing? Should You Keep Your Home as a Rental or Sell It?

When PCS orders come, one of the biggest decisions is what to do with the home you own now. Keep it and rent it out, or sell it before you go? I've helped military families do both around Fort Hood, and there's no one right answer. Here's how I'd think it through.

The quick test: does it cash flow?

Start with simple math. Take the rent the home would likely bring in, then subtract everything it costs to own as a rental:

• Your mortgage payment (principal, interest, taxes and insurance)
• Landlord insurance, which usually costs more than a homeowner's policy
• Property management, often a percentage of the monthly rent plus a fee each time a new tenant moves in
• Repairs and maintenance (many owners set aside about 1% of the home's value per year)
• Vacancy, since there may be a month or two between tenants
• HOA dues, if any

If the rent covers all of that with some left over, keeping it can build long-term wealth. If you'd be paying out of pocket every month, think hard about whether that's worth it to you.

One thing to know about Texas: if you claimed a homestead exemption, it generally ends once the home is no longer your primary residence, so your property tax bill can go up the next year. Factor that into your numbers.

Keep it vs. sell it

	Keep it as a rental	Sell it
Best when	The rent covers your costs, you have savings for repairs, and you may come back to the area	The numbers are tight, you need the equity for your next home, or you don't want to be a landlord
Upside	Rental income, the home keeps building equity, and you can sell later	Cash in hand, no tenant or repair worries, a clean break
Downside	Repairs, vacancies and tenant issues from far away, plus management fees	Selling costs, and you give up future growth in that home
VA loan	Part of your VA entitlement stays tied up while the loan is open, which can affect your next VA purchase	Your entitlement can usually be restored after the loan is paid off

The capital gains rule military families should know

Normally you can exclude up to $250,000 of profit ($500,000 for married couples filing jointly) when you sell a home you owned and lived in for at least two of the last five years. If you turn your home into a rental, that five-year window keeps running, and after a while you can lose the exclusion.

Service members get extra time. If you're on qualified official extended duty, usually orders of more than 90 days to a duty station at least 50 miles from the home or orders to live in government quarters, you can choose to suspend the five-year clock for up to 10 years. That can let you rent the home out longer and still sell it tax-free later. Depreciation you take while it's a rental is still taxed when you sell. Talk with a tax professional who works with military families before you decide, because the details matter.

If you keep it, set it up right

• Hire a property manager or have a trusted local person who can handle repairs. Managing from another duty station, or overseas, is hard to do alone.
• Switch to a landlord insurance policy and tell your lender the home is now a rental.
• Screen tenants carefully and use a written lease. My Landlord's Guide walks through the basics, and I can help you lease the home.
• Keep reserves for big repairs like a roof, HVAC or water heater.

If you sell it, give yourself time

A traditional sale usually takes a few weeks to get under contract and another 30 to 45 days to close, so list as early as your orders allow. My PCS timeline shows how to line up the sale with your report date. If you're short on time or the home needs work, my sell as-is page explains how I can bring you cash offers from investors in my network so you can compare them with listing it.

Not sure? Get both numbers

The easiest way to decide is to see the numbers side by side: what the home would likely sell for after costs, and what it would likely rent for. You can start with my free home value estimate, or call me and I'll put together both for you.

For more on moving to or from post, see my PCS guide for Fort Hood.

Trina Heinmiller
Team Lead | Southern Luxe Group | eXp Realty

I'm a real estate agent, not a tax advisor, attorney or lender. This post is general information, not tax, legal or financial advice. Tax rules and VA entitlement depend on your situation, so check with a qualified tax professional and your lender.