How to Sell a Second Home if You're in the Military

Working in the military often means moving around frequently, and households may find themselves living in one city this year and another the next. Military homeowners frequently juggle multiple mortgages, rental properties, and long-distance home sales, which can add tremendous stress to the relocation process. In addition, the VA loan many military homeowners use to qualify for the purchase of a home was designed for use with primary residences, which may make veterans and active military service members decide to sell their home whenever they relocate to a new post.

The following information details the terms for military homeowners and explains what service members can do to benefit from relocation and mortgage programs available to them when selling a secondary home.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

How Do VA Loans & Occupancy Laws Affect Selling Your Home?

Because VA loans are meant to be used for the purchase of a primary residence, many military homeowners feel obligated to sell their homes when relocating. This, however, is not a necessity: So long as both homes were purchased with the intent of using them as a primary residence, the VA loan can be employed multiple times, even simultaneously.​

A VA lender will generally consider the applicant's intent at the time they purchase the home. If a military home buyer purchases a home and lives in it for a year before being deployed to another base, they might choose to rent out the property while they're gone even though they're still going to buy a new property when they move. Just because the service member has exited the home does not mean the house has been converted into an investment property, nor does it mean they have to keep the second home if they no longer need it.

This system allows military homeowners flexibility in buying and selling their homes, as it provides a buffer for selling a home in a down market or gives them the flexibility of generating rental income from their previous homes. Just make sure to check your rental property calculator and see where you stand before you PCS. If it all checks out, military homeowners need not feel the pressure to sell immediately in the midst of relocating to a new home.

How Lender Laws Affect Selling Your Home

When buying a home, restrictions and regulations for VA loan eligibility may complicate the buying and selling process.

The exact rules will vary per lender, so it is important for military homebuyers to inquire with them before making any major moves with the property. While it will always be possible to sell a second home, the number of fees and penalties imposed by the lender might make it an impractical option if the owner had not arranged a deal beforehand.

Questions to ask the lender include:​

• What are the limits of my certificate of eligibility?
• How should a second property be rented while deployed?
• Are there limits as to how long the property can be rented out?
• Is it possible for the lender to work with home sellers who are located outside the country?

Capital Gains Exclusion

An active-duty military member who is called away from their home on orders is allowed to own a home for up to 15 years and still be exempt from capital gains. For example, a military service member who lives in their home for two years, but then rents it out for 13 years after being deployed may still be able to sell their home without having to pay capital gains. This perk makes it easier to sell a home, especially in an area that has appreciated over time.

How to Navigate Long-Distance Home Selling​

Depending on how quickly a military household is required to relocate, it can be difficult or even impossible to sell a home before the move. When selling long-distance, there are a few options to consider.

If there is a second adult in the household when the family relocates, that family member can stay behind to negotiate the home sale. This strategy is the simplest, as it gives the military household full control over the selling process and gives them more time to stage and prepare the home themselves. It also allows the household to save money on trips back and forth between the two cities during the home sale. However, if the market is slow or struggling, it may be a while before the process is finalized.

Should all adults in the household move to the new PCS location together, the family will need to depend on their real estate agent and other service providers to get their home ready to sell. While this method allows the household to stay together, it can incur additional costs, such as paying for a staging company, house clearance, vacant house insurance, lawn maintenance, and more.

The pros and cons of each strategy should be weighed carefully to determine which is right for you.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.