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I’m Kim Lankford, from Kiplinger’s Finance magazine and I know from many families that their largest investment is their home; but, home buying is extra complicated for military families who tend to move frequently and sometimes with very little notice. At the same time, service members have access to special mortgage programs and tax breaks to help them afford a home.
Members of the military receive a tax-free housing allowance to help cover their monthly rent or mortgage. If you own a home, you can deduct a hundred percent of your mortgage interest even if you’re paying with tax-free money. It’s usually a good idea to buy a good house only if you plan to leave in that area for at least three years. Five years is even better. Remember, the house will probably depreciate in value by about six percent or more just to cover the cost of buying or selling.
Members of the military eligible for VA loans which generally allows them to borrow up to four hundred and seventeen thousand dollars or more in some areas with no down payment or private mortgage insurance. That gives you a lot of flexibility that you may be able find a better elsewhere especially if you can make a 20 percent down payment.
What can you do if you transferred after buying a home? Special tax roles help military families plan to rent their homes after they moved. Most home-owners need to live in a house for two out of the past five years ending up to the same amount in order to claim tax -free profit on the deal up to $250,000.00 if you’re single or up to $500,000.00 in tax-free profit if your married following a joint return. But, because they move frequently, military families need to live in the house for just two out of the preceding ten years in order to qualify for the tax break.
This is Kim Lankford, personal finance columnist and wife of an army doctor. For more information to help military families with their personal finances go to www.kiplinger.com/link/military.
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