What’s included in your relocation package?
While your home’s value plays a role in your asking price, so might your moving expenses. According to Angi, the average cost of moving cross-country is approximately $4,600, with prices varying between $2,400 and $6,900. The total cost depends on factors such as the size of the home and the distance traveled.
Americans have been making longer moves in recent years, but the average mileage dropped from 50 to 20 miles between 2022 and 2023, according to The National Association of Realtors. This figure was still higher than in previous years when the norm was closer to 15 miles.
Beyond hiring professional movers, moving can incur other expenses, such as packing supplies, insurance, cleaning services, and storage. However, an employer’s relocation package might ease some costs.
A recent survey by Mastodon Moving, a corporate relocation company in Boston, found that homeowners’ average job relocation package ranges from $72,000 to $97,000. Over two-thirds (64%) of survey participants received a relocation package, although the majority were current employees being transferred to another location.
Some of the benefits employers are willing to pay for include:
- Temporary living expenses (85%)
- Home-finding trips (75%)
- Final move costs (72%)
- Miscellaneous expenses (69%)
Depending on where you’re moving, you could receive even more to offset these costs. A handful of states offer financial relocation incentives to attract new residents. For instance, a program called Ascend West Virginia will pay you up to $12,000 to move to the Mountain State, providing perks like free coworking space and access to free outdoor recreation, including gear rentals.
Will you pay capital gains if you move for a job?
So long as certain requirements are met, homeowners can generally avoid paying capital gains on up to $250,000 — or $500,000 when married and filing jointly — of profit when selling their home. Those requirements include:
- Ownership: You owned the property for at least two of the last five years.
- Use: You lived in the property for at least two of the last five years.
- Look-back: You did not exclude the gain from the sale of another house within two years from the sale of this house.
However, let’s say you don’t meet the eligibility test because this job opportunity came up shortly after purchasing your current home. You still may qualify for a partial exclusion of paying capital gain taxes for a work-related move if you meet any of these conditions:
- Your new work site is at least 50 miles farther from your current home than your previous work location.
- You had no previous work site and began a new job at least 50 miles from your home.
- Either of the above is true of your spouse or the home’s co-owner.
The IRS has a worksheet to determine your exclusion based on your time in the home or your length of homeownership and a resource with guidance for work-related moves. Talk with a tax professional to determine the details of your particular situation.
Can I deduct work-related moving expenses?
Moving expenses related to a job relocation are not tax-deductible unless you are an active member of the Armed Forces permanently relocating due to a military order.
If you’re thinking, “Wait, I thought any job relocation qualified for this,” — your memory serves you correctly. You used to be able to deduct moving expenses if your new home was at least 50 miles closer to your new job than your old home was (the distance test) and you’d been working that job full-time for 39 weeks within the first year after you moved (the time test).
However, the Tax Cuts and Jobs Act of January 2018 excluded all but active military from the opportunity to claim this deduction. So unless you’re military, do not budget using this tax break.
How’s the real estate market?
Your timeline for starting your new job and the housing market conditions will determine whether you could sell your home within days, weeks, or months — or if you’re better off renting it out for a bit. (More on that below.)
If the demand for housing outpaces supply, you can breathe a little easier, knowing that your home likely won’t sit on the market for long. A tight market can also mean that eager buyers can find themselves in a bidding war, raising the offers you’ll get on your home.
Of course, if you’re also looking to buy a new home in your new location where the market is similarly hot, you might find yourself on the other side of the coin.
When it’s a buyer’s market, you’ll likely find plenty of options in your new area at good prices, but your old home may take longer to sell.
What’s your plan for housing once you sell?
When selling a house for a job relocation, you must also plot where you’ll live next. Some homeowners become so frazzled that they focus solely on the former and wind up with their homes under contract without knowing whether they will buy or rent in their new location, Arledge says.
“You don’t want to find yourself homeless,” says Jessica Arledge, a top real estate agent in Savannah, Georgia, who sells 76% more single-family homes than the average agent there. “You also want to give yourself a reasonable amount of time to get out of the house.”
Have a realistic conversation with your real estate agent about the best way to handle the changeover. You might consider a sale-leaseback agreement for a few weeks, she suggests.
Also known as a seller rent-back agreement or a holdover, this allows you to stay in your home for a designated period of time after you sell. Essentially, it makes the buyer your landlord, so you have time to rent or buy a new home and arrange for the movers to collect your belongings.
Anne Sena, a real estate agent in Nashville, Tennessee, with 17 years of experience, says that rent-back situations are common in hot markets when homes sell quickly and sellers need more time to transition.
