The negative press about the economic environment means many companies are scrutinizing spending and challenging everyone with finding ways to cut cost. Unfortunately, this pressure is compelling companies to make hasty decisions about relocation benefits that are seemingly expendable, like cutting or reducing the tax gross up benefit.

The elimination of critical benefits like gross-ups from a relocation program will have a negative impact on recruiting, retention and the transferring employee. 

There are ways to reduce gross up expenditures.  Begin with an expert review of your relocation program and exceptions and determine which benefits can be modified.

For example:

• Eliminate direct reimbursement of home sale costs and employ the use of a home purchase program 
• Consider  mandatory home sale marketing periods, offering buyer concessions or providing some loss protection. This may encourage the employee to accept an outside offer sooner.   

These benefits are at cost but it may be less than extending the pricey taxable (grossed up) benefits:

• temporary lodging
• return trips to visit family
• duplicate housing assistance 

Remember!  The sooner the old home sells, the sooner the employee and family will settle in their new environment, allowing the employee to focus on their new job.

Thinking about eliminating that extra can of soup from your relocation program to save a few dollars?  Contact Capital Relocation Services first.  Let us review and transform your relocation program.

The questions are:

First:  What are you doing to prepare for the next evolution in our business cycle?  Change will likely be gradual rather than rapid like we saw over the past 18 months.  At Capital, we are aggressively managing all elements of our business to reflect today’s business environment being mindful of talent retention.  Capital continues to work with our clients to effectively manage the current environment while preparing rapid responses to guide them to maintain high level of employment centric programs during ameliorating real estate markets.  Anticipating change with an agile response system is a cornerstone to the success we are experiencing now and will have downstream.  Finding the right practice for each client’s business objectives and culture is our focus.

Second: What are you doing to learn from today’s business climate as you did from the past? Becoming a learning organization is pivotal towards building the right company culture to thrive during any business change.  We strongly believe that chronicling stories throughout theses changes are instrumental methods in imprinting the proper DNA into our own culture.  Build and document accounts of what you have done personally and professionally to navigate through today’s turbulent water.  Convey those stories to your team.  Most importantly – continue to tell the stories as time and personnel change.  They will become an important response mechanism when the next bubble bursts.  Leave your organization a legacy and tools to face whatever tomorrow brings.

George H. Herriage, SCRP, GMS

Vice President – Client Development

Capital Relocation Services

703.260.3052

gherriage@caprelo.com

www.caprelo.com

As a true, nosy, neighbor, I immediately went to the real estate company’s website, then to Realtor.com, and then to Trulia.com, in my quest to find the dreaded, low list price. To my chagrin, COMING SOON! Really means “we know the price, but we’re not going to tell you”. I could call the listing agent, but then would be required to register my name. Horrors! They would have my name and number from caller ID. Instead, I waited, diligently checking (twice) daily. My search had become an obsession.

It’s been three weeks, and the COMING SOON! Rider glares at me each morning when I leave for work and welcomes me back when I return in the evening. A trick of the trade in real estate is to keep the listing ‘in house’ as long as possible so that the listing company can earn both sides of the transaction. While morally suspect, it is also in violation of many Multiple Listing Service (MLS) requirements.

Could this listing company be purposely delaying the release of the listing, thus sparing me bad news? Is the house built over a nuclear dump site and the EPA is deciding the best course of action to take? Are the sellers reconsidering the decision to move?  Is there confusion over how much to list the property for? 

So, what is the “right practice”? Is this home listed or not? Could someone please tell me the definition of SOON?

Rick Bruce CRP, GMS

Director, Client Development

When I talk about gross-up, I get looks of uncertainty.  Many have heard the term, but most don’t fully understand the meaning and complexity.  I empathize with this uncertainty as gross-up was foreign prior to the start of my relocation career.  Now, it is so much a part of my every day life that my dreams often include the word “gross-up”.

The benefit of ‘gross-up’, a.k.a tax assistance is best described as an estimated amount  of money added to taxable relocation payments to offset the increased tax burden that results from the addition of said expenses to the employee’s wages.  In other words, the reimbursement amount is “upped” so that the employee nets the actual amount of the relocation expenses.  The ‘gross-up’ total is typically higher than an employee’s actual tax rate since the gross-up itself is considered taxable and therefore, also grossed up, a.k.a. tax on tax methodology.

The gross-up price tag often surprises corporations as a costly benefit.  However, gross-up is a necessary component of any competitive relocation program.  Without it; transferring employees would be required to pay the extra taxes that result from taxable relocation expenses added to their income.  Consequently, an employee would not net the actual relocation benefit amount and experiences a financial burden as a result of the relocation.

If an employer chooses not to provide gross-up assistance, the result could be the difference between a relocation that is successful from beginning to end and a productive, happy employee or a relocation that becomes burdensome for the employee and family.  The cost of the latter being much more substantial than providing the tax assistance benefit and potentially including hidden costs, such as loss of employee productivity, or worse, loss of the employee and the company’s overall investment in that individual. 

Conversely, employers who provide gross-up assistance as part of their comprehensive relocation benefits package recognize the importance of providing the appropriate support to relocating families, ensuring a more successful transition.   This has a direct impact on employee productivity, return on investment, employee loyalty and performance.

Capital Relocation Services is committed to ensuring our clients get the most out of their relocation policy.  I’d love to hear from you regarding the success of your relocation program, or questions you may have regarding gross-up.  We are here to help ‘connect the dots’ between relocation policy, corporate strategy and recruiting and retention goals.  Write to me at noverholt@caprelo.com.

Nicole Overholt, CRP

The number of homes for sale is HIGH, and,  mortgage rates are at historical LOWS.  What are you waiting for? 

The benefits of owning a home:

• A temporary $7,500 tax credit is now available for any qualified purchase by a first time buyer before July 1, 2009.
• Capital gains exclusion on the sale of your home, as long as you have lived in your home for two of the past five years.
• Homeowners may deduct mortgage interest and taxes as an expense against income.
• The Home Office Deduction may allow you to claim a deduction for certain home expenses if you use a part of your home for business.

The long-term investment concept of owning a home shows:

• On average, owners who purchased their home six years ago have seen the value of their home rise 24.3%  during that time, despite recent price declines.
• With current market conditions, affordability levels are more favorable than in the past.
• Real estate housing values are cyclical, historically rebounding.

Not sure of the next step to take?  Contact a Capital Relocation Services representative to focus on identifying a top realtor and lender. We’ll ‘connect the dots’ to make certain you understand the entire process. This ensures that you’ll find the best home in a location that meets the needs of you and your family.

Barbara Miller, CRP, GMS, CRB, GRI, PMN, e-Pro

Although this written communication may address tax issues, it is not a covered opinion as described in Circular 230.  Therefore, to ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments), unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein.

By:  Jim Finch

As the New Year begins, now is the time to “connect the dots”  with strategic tips from Capital Relocation Services to help sell your property in a challenging real estate market.

Property Condition – “You can never change a first impression”

• Put your home in top condition
• Clean up, paint up, and fix up!!!!!!!!

Hiring the Right Real Estate agent – “It pays to hire a professional to do the job right”

• Understand the various “agency” relationships and their implications
• Obtain at least (2) independent opinions of value and marketing strategies
• Limit the time of the listing agreement to no more than (90) days, and be sure any exclusions or ‘out clauses’ are included
• Always refer to your attorney or accountant for any legal or tax advice, not your agent! 

Intelligent Pricing – A property attracts the most attention, excitement and interest from the real estate community and potential buyers when first listed on the market.

• Don’t “test” the market and list higher for a few weeks to see if someone comes along.  It’s better to price aggressively and end up with several offers at once.
• Consider offering incentives up front rather than negotiating them at the time of an offer.
• Pricing slightly below the competition strengthens opportunities for being the first to receive an offer.

Continual Analysis of Market Performance – No one will make an offer if they do not know your home is for sale, it is not priced correctly, or in very poor condition.

• Make sure that your agent is following their marketing plan and actively marketing your property from start to finish.
• Consider price adjustments as soon as possible.  You may run the risk of a very lengthy marketing period as well as a lower sales price when it does sell.
• Consider doing those repairs that seem to be holding the buyers back from making an offer.   Buyers typically believe making repairs or improvements will be costly, time consuming and prefer to “move in” immediately without the burden of doing repairs on their minds.   

Capital Relocation Services “connects the dots” to align relocation program, policy, and practice with corporate strategy. Targeted transferee service and adherence to budgetary goals are several benefits of a well connected, strategically sound program. The goal of our proprietary Low-Stress Relocation Process™ is to proactively empower you in managing your relocation program challenges.

Wishing you a wonderful and prosperous 2009!

Moving is one of the most stressful events in our lives. In fact, moving ranks with taxes and death.

Recently, I was relocated for my job and can say first hand how stressful it was. Trying to juggle so many things was challenging. Focusing on my new job and finding a new home while coordinating moving from my old house was very difficult.   Are you helping reduce the stress of relocating your transferring employees? Below find a sampling of useful tools to help reduce the stress of relocation of transferring employees.   

1.)  A well designed relocation policy helps reduce stress for your transferring employees. The challenges facing transferees today are far different then they were 5 years ago.  A declining real estate market is one of the biggest differences your homeowner transferees face.

If you have a policy in place, has it been updated?  

2.)  Professional relocation assistance is crucial. Are your transferees moving on their own or do they have professional assistance? A relocation company employs relocation professionals trained in helping navigate and guide your transferring employees through a much less stressful move. The professional services of a relocation company not only reduces employee stress but can facilitate a more efficient move process saving your company money in lost productivity, and overrun relocation costs.

Capital’s Low-Stress Relocation Process brings it all together to make relocation a strategic advantage.  Reducing relocation stress for the employee will increase their productivity in their new position faster and saves your corporation money.

Chris Finckel

cfinckel@caprelo.com

First and foremost, I am grateful that Capital is the kind of business that is focused on its clients, customers, employees and suppliers. I can assure you that is why I have invested myself in this organization for the past eight years.  This clear focus is an enabler that frees us to do what is in the best interest of each of our stakeholders with the knowledge that making decisions that are best for them will benefit the entire company with increased profits, client loyalty and empowered team members.  I’m grateful for each of our clients.  They are the reason for our existence.  Our clients have helped us grow Capital over the past five years.  We are appreciative of these professional relationships and the trust you put in us to move your employees around the  world .  I’m thankful for our thousands of relocating customers each year.  You enrich our life by giving us an opportunity to be of service to you.  I’m eternally grateful to my fellow colleagues.  They are the proverbial “engine that drives this train”.  Their passion for operational excellence; dedication to their customers and determination to have fun while serving others give me reason to leap out of bed each morning and be eager to join them at work.  I’m indeed thankful for the many supplier partners we use around the world.  Your professionalism and caring are one of Capital’s competitive edges in the marketplace.