Certified Relocation Professional (CRP) Practice Exam

In which area is a company least likely to provide tax protection assistance?

1. House hunting expenses

2. Purchase closing costs

3. Temporary living expenses

4. Cost of living allowance

The correct answer is: Purchase closing costs

When considering tax protection assistance, it is essential to understand how different types of expenses are treated under tax regulations. Closing costs, often incurred during the purchase of a new home, are generally not subject to tax protection because they are part of the home-buying process that does not generate a taxable benefit to the employee. Instead, these costs are typically considered a personal expense of purchasing a home rather than a relocation or business-related expense. House hunting expenses, temporary living expenses, and cost of living allowances typically qualify for tax assistance because they are directly related to an employee's relocation process and can impact the overall financial burden on the employee during the transition. Companies often want to ease the tax implications associated with these expenses, ensuring that their employees do not end up with taxable income as a result of the company's support. In contrast, purchase closing costs do not fall into the same category because they do not usually provide a direct benefit that the employee would be taxed on in the context of their relocation package. Thus, this is why assistance in this area is least likely to be offered by companies, with a focus instead on other expenses directly associated with relocation that are more relevant to tax protection.