Relocation companies do not profit from buying and selling employees' homes. They provide a market-based offer that is an average of independent appraisals. Payments to vendors on behalf of employees are non-taxable if for household goods moves, final destination move costs, or qualified home sale programs. While other relocation expenses use the 50-mile test for tax protection, home sales do not and are sometimes taxable. Short-term assignments under 1 year are treated as business trips for tax purposes, but assignments required beyond 365 days include taxable travel reimbursements after that point. Relocation company service fees of 3-5% of relocation spending can greatly reduce costs for organizations while ensuring tax compliance and program structure

1. U.S. Domestic Relocation
Dispelling 5 Common
Myths
WHR Group

2. RELOCATION COMPANIES
MAKE MONEY BUYING AND
SELLING HOUSES
1.

3. Relocation companies provide a
market-based offer for an employee’s home
based on the appraisal criteria set forth by
the Worldwide ERC.
Relocation home sale expertise
Priced to sell
IRS compliant

4. Typically, two appraisals are ordered from
independent appraisers, and the results are
averaged for an offer on the employee’s home.
$208,000
$203,000
/2
$205,500 buyout
+
=

5. Relocation companies do not make a profit
on buying and selling the home but rather are
paid a fee for services regardless of the
property’s eventual sales price.

6. IF A RELOCATION COMPANY
MAKES PAYMENTS TO VENDORS,
IT’S NOT A TAXABLE
REIMBURSEMENT TO THE
EMPLOYEE
2.

7. All payments made on behalf of an employee
to a vendor can be considered taxable income
to the employee.

8. Exceptions to this are...
Household goods move costs
Final move costs to the
destination
Any costs associated with a
qualified Home Sale program

9. HOME SALES ARE TAXABLE IF
THEY DON’T MEET THE IRS
“50 MILE” TEST
3.

10. Home sales fall under a different
IRS tax ruling than other relocation
expenses
(specifically Revenue Ruling 72-339)

11. While these other relocation
expenses use the 50-mile test to
determine tax protection, the test
does not apply to home sale
programs
[Organizations can handle home sales like
any other business expense]

12. SHORT-TERM ASSIGNMENTS
LASTING LONGER THAN 365
DAYS DO NOT NEED BENEFITS
TAXED UNTIL
DAY 366
4.

13. Short-term assignments less than
one year are treated like any other
business trip.

14. HOWEVER
Once an assignment
is required beyond 365 days
in duration, travel reimbursements are taxable.

15. RELOCATION COMPANIES’
SERVICE PROVIDER FEES CAN
VASTLY REDUCE AN
ORGANIZATION’S RELOCATION
SPEND
5.

16. Provider fees typically account for only
3 - 5%
of relocation
spend
(While a small amount in comparison to total cost, these fees can
reap great rewards in cost savings, program structure, and ensuring
tax compliance.)

17. WHR Group helps transferring employees by
making moves simple, smooth, and enjoyable.
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