Military Housing, rentals, home buying, real estate, VA home loans - Navy Times

Housing: Basic Allowance for Housing

Hundreds of thousands of service members stationed in the U.S. live off base and collect the Basic Allowance for Housing, or BAH. The tax-free monthly allowance goes to families who cannot get government quarters or who choose to live off base.

The system is intended to provide service members with housing compensation in line with civilian rental costs in the area where they are stationed. Allowances are based on location, rank and whether a member has dependents.

Allowances are devised from surveys of local civilian housing costs and adjusted accordingly. Rates are usually adjusted each Jan. 1, although Pentagon officials can update more often, as they did in the Gulf Coast region in the wake of hurricanes Katrina and Rita in 2005.

Under a recently completed five-year program to improve BAH, the allowance now covers 100 percent of average rental costs in all locations. Before the BAH overhaul began, service members paid an average of nearly 19 percent of their housing costs out of pocket.

Defense officials stress that BAH now fully covers average rental costs. Some service members still might choose to pay out of pocket for a portion of their rent to get larger accommodations. Thus, out-of-pocket costs for all members will never be eliminated.

Over its five-year upgrade to the BAH program, the Pentagon maintained “geographic rate protection,” a sort of artificial floor that prevented BAH rates from dropping in any area where housing costs happened to decline in a given year.

With the completion of the five-year plan, defense officials removed that geographic rate protection with the BAH rate changes that took effect Jan. 1, 2006, which means allowance rates can now go down as well as up in some locations from year to year.

However, the BAH program still features “individual rate protection” — a service member who arrives at a duty station and begins receiving BAH at that year’s rates will continue to get that rate for as long as he remains at that location, even if housing costs later decline in that area. However, newly arriving service members at that location will get the lower BAH rate, on the assumption that they will be able to find suitable housing at less cost.

Because housing allowances are based on the prevailing rental cost of the area where a member works, someone who changes duty stations without changing residences may see a change in BAH. For example, a member could be stationed in an area with several duty stations within commuting distance of his residence. The member could be reassigned to one of the other duty stations and decide not to change residences.

Since his BAH would be based on his new duty station, he could see a change. If this change in duty assignment involves a low-cost or no-cost move, the member, with the permission of his service, can continue to receive his former BAH payment.