JBSA Neighborhoods

Decision guide · PCS orders · Owners

Sell, rent out, or hand off the loan when orders arrive

An owner with new orders has three ways out of a San Antonio-area house: sell it, keep it and rent it, or sell to a buyer who assumes the VA loan. Each one trades something. Selling frees the cash and, once the loan is paid, the VA entitlement, but sale costs come off the top. Renting keeps the house and the loan, and keeps both the entitlement and the landlord work. The IRS rules on home-sale gain set a clock on the rental route, and military orders can stop that clock.

General information, not tax, legal, or financial advice for a specific owner. Sources and dates are at the end.

The tax clock on a home sale

IRS Publication 523 lets a seller exclude up to $250,000 of gain on a main home, or $500,000 for a married couple filing jointly, if the seller owned it and lived in it for at least 24 months of the 5 years before the sale. The 24 months do not have to be in a row. The exclusion can be used once in any 2-year period.

That 5-year window is what makes renting out a timed decision. By that arithmetic, someone who lived in the house for three years and then rented it has roughly three more years to sell before the window no longer holds 24 months of living there. The IRS's own example: an owner who lived in the home for three years, rented it for almost two, and then sold could still exclude the gain, because time rented after the last stretch of living there, inside the 5-year window, is not counted against them.

Source: IRS Publication 523 (2025), Selling Your Home, checked 2026-10-04.

How service can stop the clock

A member of the uniformed services, or whose spouse is one, can choose to suspend the 5-year test period while on qualified official extended duty. Publication 523 defines that as being called or ordered to active duty for more than 90 days or for an indefinite period, and either serving at a duty station at least 50 miles from the home or living in government quarters under orders.

The suspension can last up to 10 years, so the 5-year period plus the suspension can reach 15 years. It applies to one property at a time, it can be revoked, and it is elected by filing the return for the year of the sale. Publication 523's example is an Army member who lived in a home for three and a half years, spent the next six years away on qualified duty, and still met the test after choosing to disregard those six years.

Two limits. Any depreciation taken, or that could have been taken, while the house was a rental cannot be excluded. And a seller who misses the 2-year test may still get a partial exclusion after a move for a job at least 50 miles farther from the home.

Source: IRS Publication 523 (2025), sections on service personnel, depreciation, and work-related moves, checked 2026-10-04.

What keeping the VA loan does to the next purchase

VA gives entitlement back in three ways: the home is sold and the loan paid off; a qualified veteran assumes the loan and substitutes the same entitlement; or the loan is repaid in full while the owner keeps the house, which works only once. Renting the house out with the loan in place fits none of them, so the entitlement stays in use.

The next VA purchase can still work on what is left. VA's formula is 25% of the county loan limit minus entitlement already charged. Under the 2026 limit of $832,750 used across Bexar, Guadalupe, and Comal counties, 25% is $208,187.50. Take an illustration loan of $306,450 with $76,612.50 charged. The remainder is $131,575, and VA says most lenders would lend about four times the remainder, $526,300, without a down payment. FHFA sets $832,750 for most of the country; high-cost areas have higher limits, which leave more room. A lender may ask for a down payment above that line.

Restoration: VA home loan eligibility, updated 2026-09-22, checked 2026-10-04. Formula: VA entitlement and limits, updated 2025-08-12, checked 2026-10-04. Limit: FHFA 2026 county file, checked 2026-10-04.

Worked example: does the rent cover the house?

Labeled illustration only, carrying forward the $300,000 house from the rent-or-buy guide. The tax line here uses the Bexar chart rates for Universal City and Schertz-Cibolo-Universal City ISD with no exemption at all, because this page does not assume a rental keeps homestead exemptions.

Illustration only: monthly cash flow on a rented-out $300,000 house
LineMonthly
Principal and interest, $306,450 at 7.28%$2,097
Property tax at 2.350584 per $100, no exemptions$588
Owner's cost before insurance, repairs, vacancy, management$2,684
Rent benchmark: HUD FY2026 Small Area FMR, 3 bedrooms, 78148$1,770
GapAbout $914 short

A loan taken out when rates were lower changes this line more than anything else. So does the ZIP: HUD's three-bedroom benchmark is $2,330 for 78154 and $2,750 for 78108. Neither benchmark is a market rent for any one house.

Rates per $100: Bexar Appraisal District chart, 2025 rates as of 2025-12-05, checked 2026-10-04. Rate: Freddie Mac PMMS, 2026-10-01, checked 2026-10-04. Rents: HUD FY 2026 Small Area FMRs, checked 2026-10-04.

Renting to someone in uniform

If the tenant is in the military, the Servicemembers Civil Relief Act gives them rights a landlord has to plan around. A tenant who signs a lease while serving and later receives PCS orders, or deployment orders of at least 90 days, can end the lease. With a monthly rent, it ends 30 days after the next payment is due. The Justice Department treats lease clauses requiring a minimum distance to the new station as likely unenforceable. A landlord also needs a court order to evict a service member or their dependents during service.

Source: DOJ, Financial and Housing Rights, updated 2025-05-12, checked 2026-10-04.

The tradeoff

Selling ends the payments, closes the tax question while the 2-of-5 test is easy to meet, and restores the entitlement once the loan is paid off. It costs whatever the sale costs, and every 1% of a $300,000 price is $3,000. Renting keeps a possible gain and a loan rate that may be hard to replace, at the price of a monthly gap, a tenant who may leave on orders, and entitlement still in use. A sale to a buyer who assumes the loan sits between the two; the assumption guide covers it.

Sources and dates