Does a Military Real Estate Sale Avoid Capital Gains Tax?

Many military personnel change their personalgets this same "exclusion" amount. But, for military
residences more frequently than the average civilian.homeowners, while the law is essentially the same as
When it comes time to sell the property, one specificit is for civilian homeowners; it does come with one
question that comes up right away is: does a militaryimportant exception.
real estate sale avoid capital gains tax?In 2003, Congress passed the Military Family Tax
Because military personnel are forced to move soRelief Act, which allows both military and
often, this exacerbates the questions and concerns allforeign-service personnel to suspend the normal
of us have when it comes time to decide whether toresidency period for up to ten years as long as they
keep or sell a particular property. With the recent runare stationed at least fifty miles from their property.
up in real estate prices, the good news is most ofBasically, if you have been away due to military
these properties have lots of appreciation. The badservice for no more than ten years, and have used it
news is the government likes to tax that appreciation.as a primary residence for at least two years out of
This has many in the military wondering that since theythe past fifteen, than you will most likely qualify for
work for the government is there any specialexempt status as long as your capital gain is below
treatment? In other words, does a military real estatethe maximum amount! Again, this is great news for
sale avoid capital gains tax?those in the armed services who were wondering
Fortunately there is some special good news for thosedoes a military real estate sale avoid capital gains tax?
in the armed services. Specifically, the news is forIt is also good news for military personnel who are
military your real estate sale may avoid capital gainsinterested in buying a home and might otherwise have
tax! Here's how it works:been discouraged by the normal residency
As you are probably aware, if you sell your home forrequirements.
more than you originally paid, the resulting profit isNote, if you own an investment property (not your
known as capital gain. If your capital gain is no moreprimary personal residence) that has the potential to
than $250,000 for an individual (or $500,000 for marriednet a gain greater than the maximum amount allowed
couples) the IRS says you can avoid paying capitalfor exemption, this rule does not apply. The normal
gains tax as long as you have lived in the house fordeferral techniques, such as the 1031 exchange rules,
two out of the past five years. And, actually everyoneare applicable.