IRS Section 121 — Military Capital Gains Exclusion Extension
The standard IRS Section 121 home-sale capital-gains exclusion ($250K single / $500K married) requires you to have lived in the home as your primary residence for 2 of the last 5 years. Service members on qualifying official extended duty can SUSPEND the 5-year clock for up to 10 years — meaning you can rent out a former primary residence for up to 10 years after PCS and still claim the exclusion on sale.
How to access
Restrictions
Massive on appreciated houses bought at a duty station then turned into rentals on PCS. Civilian 2-of-5 rule maxes out at $500K married-filing-jointly tax-free; the military 10-year suspension lets you potentially keep that benefit on a property you rented for 8 years. Talk to a military-specialized CPA before the sale year — the suspension applies to the gain, not the depreciation recapture. Cros
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