About Buyer Value Option
After the 2018 Tax Reform Bill all employee relocation related deductions were eliminated. In other words all relocation expenses became taxable. However there is one tax protection that remains in the employee relocation process, the Buyer Value Option (BVO) otherwise known as “an Amended Sale”. The good news is a BVO covers the highest expense in the relocation process Home Sale Costs. Home selling costs are consistently reported each year as the number one expense during an employee relocation. In turn for companies who “tax assist” or “gross-up” employees the home sale gross up is the highest gross up in the employee relocation process. It is of course up to the company whether or not selling costs will be covered and whether or not a company choses to tax assist/gross-up an employee. For those that do, a BVO program will “tax protect” these costs in turn saving the company from having to “tax assist” their employee and essentially eliminates the need to “gross-up”.
On average this saves the company $15,000 or more per home sale (depending on the selling price of the home). As such eliminating this expense can offer a significant savings to your employee relocation program. However a BVO program is not without its downsides. Below is an overview of the program, how it works and why ARC is considered one of the top Relocation Companies in the world at managing a BVO program.
ARC is a Buyer Value Option provider to the United States Government under GSA schedule 653-5. In fact ARC provides a Buyer Value Option program to employees relocating with many of the agencies that regulate the relocation industry. As such ARC’s process, technical capabilities and experience have all been vetted and approved by GSA. ARC’s compliance, experience and efficiencies are at the forefront of the relocation industry. In addition to ARC’s technical capability ARC’s customer service has been ranked by both clients and employees at the top end of the entire relocation industry! Please click here to see ARC’s 2019 HRO Baker’s Dozen Ranking and Survey Ratings on Facebook from transferees who used ARC Relocation.
ARC will provide the client with expert advice and counsel to follow the IRS and ERC guidelines and suggestions for Home Sale Programs. Click here to see the IRS revenue ruling on “Amended Sales” and other relocation costs. The Employee Relocation Counsel (ERC) acts as the governing body for the relocation industry.
ARC’s video does a great job of explaining the BVO / Amended Sale process and all of the risks and rewards. Below is a brief summary of the pros and cons.
For more information about BVO or any other of our services, please contact us.
What is a Buyer Value Option (BVO)?
A Buyer Value Option (BVO) is a process in which the Relocation Management Company is able to a) support a sale to an outside buyer while b) providing “tax protecting” to the employee and employer for the payment of realtor commissions and closing costs.
Why do companies offer relocating employees a BVO?
Companies offer relocating employees a Buyer Value Option (BVO) to “tax protect” the payment of realtor commissions and closing costs on the employee’s home sale.
** It is important to note a) this is the ONLY opporunaity in relocation to tax protect any services and b) home sale costs are the highest cost in the relocation process. (As such tax protecting home sale costs offers the most sigificant cost savings opprtunity).
Has the IRS made revenue rulings on the Buyer Value Option (BVO) process?
Yes – the IRS revenue rulings on the “Home Sale” program can be found here.
Removes financial burden to employee for “reimbursement” process
Eliminates front-end tax costs
Eliminates back-end tax costs (“gross-up” and “true-up”)
Stream-lines the home sale process
Sale must present risk of a “fall thru” and the home could be taken into inventory (increasing costs to the company)