If you have PCS orders, keeping and renting your Coronado home is often workable because military owners get extra time on the home sale tax exclusion: the 5-year lookback can be suspended for up to 10 years while you serve on qualified official extended duty. Keep the home if the rent covers your costs and you have a reliable way to run it from your next duty station. Sell if the numbers are thin, you need the equity, or you do not want to be a long-distance landlord. Either way, decide early, because the lease, insurance and management need to be in place before you report.

Key takeaways

  • IRC § 121(d)(9) lets you suspend the 5-year period for the home sale exclusion while you or your spouse are on qualified official extended duty, for up to 10 years.
  • Your homeowners' exemption ends when the home is no longer your principal residence, and ending it is your job.
  • If you rent to a servicemember, that tenant can end the lease early on PCS or deployment orders under the federal SCRA, so plan for mid-lease turnover.
  • California protects military and veteran status in housing, so the rules work both ways: you cannot screen applicants on it.
  • Managing a rental for someone else for pay requires a California real estate license; check it before you hand over the keys.

Your tax window can pause while you are on orders

Normally you can exclude up to $250,000 of gain on a home sale, or $500,000 for joint filers who meet the conditions, if you owned and used the home as your principal residence for at least 2 of the 5 years ending on the sale date (IRC § 121). For a servicemember who rents the home after leaving, the clock is the problem. Section 121(d)(9) addresses it:

  • You can elect to suspend the 5-year period while you or your spouse are on qualified official extended duty.
  • That means serving at a duty station at least 50 miles from the home, or living in government quarters under government orders.
  • Extended duty means active-duty orders for more than 90 days or for an indefinite period.
  • The suspension cannot extend the 5-year period by more than 10 years.

Periods of up to 10 years on qualified official extended duty also do not count as nonqualified use. One rule does not pause: you cannot exclude gain equal to depreciation allowed or allowable on the rental. IRS Publication 523 (opens in a new tab) explains the election.

This is general information, not legal or tax advice. Confirm the details for your situation with a California attorney or tax professional.

A timeline from orders to report date

  1. As soon as orders arrive: decide keep or sell. Get a rent estimate and price out the costs, then compare. Our rent or sell guide has a decision table.
  2. Check the HOA, if you have one. Under Civil Code § 4741, an association cannot cap rentals below 25% of homes, but it may ban rentals of 30 days or less. Before renting, you must give it proof of your title date and the tenant's name and contact information (§ 4740).
  3. Call your insurer. A rented home is usually insured under a landlord or dwelling policy, not a homeowners policy, and a landlord policy can cover lost rent if the home becomes uninhabitable.
  4. Choose who runs it. If you hire a manager, confirm the broker license; managing rentals for others for pay requires one (Bus. & Prof. Code § 10131(b)). Set an approval limit for repairs and an emergency plan in writing.
  5. Get the home rent-ready. Working smoke alarms and, where there is a fuel-burning appliance, fireplace or attached garage, carbon monoxide devices. For leases entered into, amended or extended on or after January 1, 2026, a working stove and refrigerator (Civil Code § 1941.1).
  6. Sign the lease before you leave if you can. Include the required disclosures, and take move-in photos, which California requires for tenancies beginning on or after July 1, 2025 (Civil Code § 1950.5(g)).
  7. After you move out: the homeowners' exemption requires that the home be your principal residence on the January 1 lien date. You must end it once you no longer qualify, and December 10 is the last day to do so without penalty.

Renting your home does not by itself trigger a Prop 13 reassessment. Reassessment follows a change in ownership or new construction.

When you are the landlord: your tenant's SCRA rights

If you rent to a servicemember, the law that protects you as a tenant also binds you as a landlord. Under 50 U.S.C. § 3955, a servicemember can end a residential lease signed during service after receiving PCS orders or orders to deploy for at least 90 days.

  • The tenant gives written notice plus a copy of the orders.
  • For a monthly lease, termination takes effect 30 days after the next rent due date following the notice.
  • Rent is prorated to that date, and you may not charge an early termination fee.
  • Rent paid in advance for after that date must be refunded within 30 days.

California's Military and Veterans Code § 409 has parallel lease-termination rules. A landlord also may not evict a servicemember during military service without a court order where the monthly rent is at or below the federal ceiling, which is $10,542.60 for 2026 (50 U.S.C. § 3951).

Two California rules follow. Military and veteran status is protected under Gov. Code § 12955, so you may not refuse or favor applicants on that basis. And the small-landlord exception that allows a deposit of up to two months' rent does not apply when the tenant is a service member (Civil Code § 1950.5(c)(5)); the general cap is one month's rent, as of October 2026. Our guide to renting to military tenants in Coronado covers this in detail.

When you are the tenant at your next station

The SCRA protects you on the same terms if you rent at your next duty station. Military OneSource notes that a lease "military clause" can add protection and warns against signing anything that waives your SCRA rights.

Running the rental from your next duty station

Plan for:

  • One local point of contact with authority to approve repairs up to a set limit and to act in an emergency.
  • Written statements of rent collected and expenses paid, which you will need for Schedule E.
  • Authority to sign. If someone will sign leases or documents for you, talk to a legal assistance office or attorney about the right document before you go.
  • State tax. California taxes nonresidents on rent from California property, and rent paid to nonresident owners through a property manager is generally subject to 7% withholding (FTB Pub 1017, rev. 02/2026). How residency works for servicemembers is a separate question, so confirm your status with a tax professional.

To reach military renters, landlords and managers can list homes on HOMES.mil (opens in a new tab), the Defense Department's official housing listing site; listings must meet minimum housing standards. AHRN.com is privately owned and not endorsed by the Defense Department. BAH is not a rent price: it is set by ZIP code, pay grade and dependency status; look up current rates in the official DoD BAH calculator (opens in a new tab) rather than relying on secondhand figures.

See managing your Coronado rental from afar for the full remote setup, or Coronado property management for what a manager handles.

The home sale exclusion timeline estimates when your 2-of-5-year window closes, including the military suspension.

More from the Military Rental Guide

Frequently asked questions

Can I rent my Coronado home after PCS and still sell it tax-free later?

Possibly. You normally need 2 years of ownership and use in the 5 years before the sale, but IRC § 121(d)(9) lets you suspend that 5-year period for up to 10 years while you or your spouse are on qualified official extended duty, such as a duty station at least 50 miles away. Gain equal to depreciation is still taxable, so have a tax professional confirm your dates.

What happens if my military tenant gets PCS orders?

The tenant can end the lease by giving written notice with a copy of the orders. For a monthly lease, it ends 30 days after the next rent due date, rent is prorated, and you may not charge an early termination fee under 50 U.S.C. § 3955.

Do I have to tell the county assessor I moved out?

Yes, in effect. The homeowners' exemption requires that the home be your principal residence on January 1, and San Diego County says it is the owner's responsibility to terminate it when no longer eligible. December 10 is the last day to do so without penalty (as of October 2026).

Can I charge a military tenant a larger security deposit?

Not under the small-landlord exception. California generally caps deposits at one month's rent, and the exception that allows up to two months for some small landlords does not apply when the tenant is a service member. You also may not refuse to rent to a service member because of that rule.

Next step: price the rental before you decide

A real rent estimate is the fastest way to settle keep or sell. McKee Properties has managed rentals from its Coronado office since 1989 and offers a free, no-obligation rental analysis. Request your Coronado rental analysis, or browse the full Coronado Rental Guide.

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