This is a straightforward home sale program as the transferee will be responsible for the marketing and sale of the home. Upon closing, the transferee is reimbursed for the real estate commission and customary non-recurring seller’s costs associated with that sale. This program allows the company to stay out of the transaction and, as such, has no risk of owning the property if a sale or closing does not occur. There is a significant tax impact with this program. Reimbursed home sale closing costs are viewed as taxable income by the IRS. As a result, there is an added tax burden that can become significant for the employee or company dependent upon if the reimbursement is tax assisted or not.
This program mitigates the tax liability of the direct reimbursement program. It allows the transferee to list and market the home until an offer is received on the property. The Relocation Management Company (RMC) purchases the property from the employee based on the sales contract amount, the same terms, and conditions, and in turn sells it to the ultimate buyer. For the BVO program to be IRS compliant, there are two separate sales that take place for the property. This removes the tax liability for the costs covered for the real estate broker’s commission and the seller’s closing costs of the property. However, if the sale falls through for any reason, there is the risk of the home being taken into inventory.
With a GBO / AV program, the transferee/homeowner normally has a company policy defined timeframe in which to find a buyer for the property. Timeframes for marketing requirements can range from 60 to 120 days. If the transferee is unsuccessful in selling the home, they have the option of taking the Guaranteed Buy-out offer from the RMC. This GBO value is based on the average of two relocation appraised values.
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LINK TO DATA SECURITY
LINK TO REPORTS
LINK TO BVO AND GBO/AV OVERVIEWS – .PDF IF EMAIL PROVIDED
LINK TO 11 KEY ELEMENTS – .PDF IF EMAIL PROVIDED