RSC Home Sale, Purchase & Housing Assistance 3 — Questions and Answers
Question 1: Which scenario best describes a 'Buyer Value Option' (BVO) homesale program?
- The employer purchases the home at the appraised value immediately
- The RMC purchases the home only after the employee has found an outside buyer (Correct answer)
- The employee receives a cash allowance instead of company assistance
- The employer auctions the home to the highest bidder
Correct answer: The RMC purchases the home only after the employee has found an outside buyer
Under BVO, the RMC steps into the transaction only when a buyer is already under contract, taking title briefly to facilitate the tax-free benefit.
Question 2: A transferee is in a community property state. Why is this legally significant for a relocation homesale?
- Only the employee needs to sign the homesale documents
- Both spouses must sign the deed and homesale agreement even if title is held in one name (Correct answer)
- The employer assumes joint ownership automatically
- Community property states require a court order before sale
Correct answer: Both spouses must sign the deed and homesale agreement even if title is held in one name
In community property states, both spouses hold an ownership interest in marital property, so both must sign conveyance documents for the sale to be valid.
Question 3: What is the ERC-recommended minimum number of appraisals required to establish a guaranteed offer under the standard homesale program?
- One
- Two (Correct answer)
- Three
- Four
Correct answer: Two
ERC guidelines require at least two independent appraisals so the guaranteed offer reflects a reliable, averaged market value rather than a single opinion.
Question 4: Under a corporate home purchase program, what does 'points assistance' typically refer to?
- Reimbursement for the transferee's real estate agent commission
- Employer payment of mortgage discount points to reduce the employee's interest rate (Correct answer)
- Loyalty rewards points earned through a preferred lender
- A credit applied to the employee's relocation allowance
Correct answer: Employer payment of mortgage discount points to reduce the employee's interest rate
Points assistance is when the employer pays mortgage discount points on the transferee's new loan to lower their interest rate and reduce monthly payments.
Question 5: Which IRS tax treatment applies when a company purchases an employee's home through a Guaranteed Buyout (GBO) program?
- The full sale proceeds are taxable income to the employee
- The transaction is generally tax-advantaged because the company, not the employee, sells to the outside buyer (Correct answer)
- The employee owes capital gains tax on the appraised value regardless of sale price
- GBO proceeds are always fully tax-exempt under IRS rules
Correct answer: The transaction is generally tax-advantaged because the company, not the employee, sells to the outside buyer
In a properly structured GBO, the company takes title and resells the home, so the employee is not the seller of record and does not recognize taxable gain on the resale.
Question 6: A transferee's home has a septic system that fails inspection during the homesale process. Who typically bears the repair cost under a standard BVO program?
- The outside buyer
- The transferee, as the home must be in marketable condition (Correct answer)
- The RMC absorbs all repair costs automatically
- The municipality is responsible for septic repairs
Correct answer: The transferee, as the home must be in marketable condition
Under BVO programs, the transferee is generally responsible for repairs needed to bring the home to marketable condition before the RMC takes title.
Question 7: What does 'equity advance' mean in the context of relocation homesale assistance?
- A loan given to the employee secured by the new home
- A pre-closing payment to the employee based on anticipated net proceeds from the home sale (Correct answer)
- An advance on the employee's annual bonus tied to relocation performance
- A government subsidy for first-time homebuyers
Correct answer: A pre-closing payment to the employee based on anticipated net proceeds from the home sale
An equity advance allows the transferee to access estimated net sale proceeds before the home officially closes, easing cash flow for the destination home purchase.
RSC Home Sale, Purchase & Housing Assistance 3
Which scenario best describes a 'Buyer Value Option' (BVO) homesale program?