GetThis: Base Closings Less Painful At Tax Time
By Carl Surran
Spring 2004
The value of homes owned by military families can plummet when a base closes or cuts operations. To lessen the blow, future payments under the Homeowner's Assistance Program, where servicemembers are reimbursed for declines in home values caused by base closings and realignments, are no longer taxable.
Under the new Military Family Tax Relief Act, these reimbursements are not considered as a servicemember’s taxable income. This is an important change in anticipation of the next round of base closures to begin in 2005. But this new tax break is not retroactive and applies only to reimbursements made after November 11, 2003, when the law was signed.
The Act provides several additional new tax breaks for military families, including loosening the rules for exclusion of capital gains earned from the sale of a primary residence for servicemembers called to active duty, and doubling the military death benefit from $6,000 to $12,000.
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Carl Surran is managing editor of Military Money.
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