According to the U.S. Census Bureau, almost 20 percent of Americans who moved between 2012 and 2013 did so because of a job. Depending on what industry you’re in, relocating to a tech hub might be a good way to open yourself up to more opportunities. Or maybe, you’ve been offered a relocation package as part of a job offer.
No matter what led you to consider relocating for work, you now have a whole host of things to consider. How should relocation affect your negotiation? What kind of tax breaks can you get? Never fear, we’ll cover everything you need if you’re relocating for a job, and then some.
How to Use Relocation to Get the Upper Hand in Negotiations
If you’re considering relocation as part of a job offer (compared to relocating to find a job), relocation benefits should definitely factor into your negotiating.
Consider the New Cost of Living for an Adjusted Salary
Six figures will go much further in some cities than others. For example, someone who makes $80,000 a year in Springfield, MO, would need to make $156,500 in San Francisco to get the same standard of living (almost twice as much!).
Be careful not to oversimplify, though. You can’t just look up the cost of living, add a little to your old salary, and be done with it. The salary range for a job title or skill set can vary quite a bit from city to city.
For example, a software developer in Richmond, VA can expect to make between $52,311 and $87,259 (according to Payscale’s salary calculator). However, in Austin, TX, the range is $48,698 – $92,355.
In other words, in Austin, the range is wider and the salary tops out at a higher number, even though the cost of living is slightly lower (6.8% lower) than Richmond, according to Salary.com. Check out the salary range and find out where the salary tops out for both your current location and future location, and compare that to cost of living.
Don’t forget to take transportation and travel costs into account when negotiating. There’s your initial costs for moving — whether you go via a road trip, plane trip, rent a Uhaul truck, or something else. There’s also recurring travel costs — if you’re moving away from family and will be visiting them regularly, you’ll want to add up the approximate yearly total of visiting your family.
And of course, you need to look at the transportation options in the new city. If you’re in a place where public transportation is great, so you don’t own a car, but you’re moving to a place where a car will be necessary to get around, you’ll have to factor in not just for increased recurring costs in insurance, taxes, and registration, but also the up-front cost of buying or putting a down payment on a car.
You’ll also want to think about housing — both temporary and what the housing market is like in your new city. When it comes to temporary housing, they might be able to offer a corporate housing option (or they might be willing to just grant you a stipend to use for temporary housing). Aside from helping to ease and spread out your moving related costs, this can give you some time to check out housing (and things like school districts, etc.) without having to move into an apartment sight unseen.
And, aside from the cost of housing in the new place, you’ll want to look at how competitive the market is, as well. If you’re moving to a more competitive marketing, you’ll probably have to pay more in up-front deposits, or might spend longer in temporary housing, which can cost more money.
For more negotiation tips, check out this Muse article on the 5 things you didn’t know you could negotiate when relocating. If you’re thinking about relocating before you find a job, USA Today has a job growth forecast map that you’ll find useful.
Finding housing in your new city and dealing with your old housing
If you can’t get temporary housing or corporate housing with your relocation benefits, you’ll need to find someplace on your own. Staying in a hotel long-term can get expensive, so you’ll probably want to find a rental at first, at least in the short-term. There are plenty of sites where you can find housing on your own, from Apartments.com to PadMapper to Craigslist. You can also find a local apartment locator — in most places, apartment locators don’t charge you a fee. Instead, they get commission based on placing you in an apartment, which makes it much easier to find someplace without spending hours scouring sites and following up with leasing offices while you’re trying to navigate a move.
These options would be the way to go if you wanted to look at renting an unfurnished apartment for 3-6 months (or even a full year) before buying a place. If you’re new to a city, and not sure how long you’ll want to stay there or if it will be a good fit, renting first can be a way to test the city out without the risk and investment of buying.
For maximum flexibility, you can rent month-to-month, but the month to month fees are usually high enough that you might as well be renting a furnished apartment or a hotel. AirBnb is useful for finding a furnished place for a shorter timeframe (1-3 months), if the housing market isn’t very competitive and it won’t take long to find a permanent solution. This option is going to be more expensive, though, so you’ll need to budget accordingly.
When you’re deciding rather to rent or buy in the long-term you’ll want to look at factors like the local market, the details of your financial situation, and how long you plan to stay in the city.
Looking at a buy or rent calculator that takes these factors into account can give you an idea of which might be the better option at the moment. From there, you can talk to a real estate agent and/or a financial advisor to confirm your decision and start looking at houses to buy.
What to do with your old home
If you’re currently a homeowner, you’ll want to get your house sold — and fast. You can do things like refreshing the interior and exterior (with paint and cleaning), pricing it competitively, and making small improvements to increase the likelihood of it selling quickly. Working with an agent is your best bet to get your house off the market; you’ll be able to focus more of your time and energy on the move, and less on selling your home.
If you currently rent, you’ll want to make sure you follow the guidelines in the lease to the letter, to prevent anything negative from showing up on your rental and/or credit history. Usually, your options are either finding someone to take over your lease, who can pass the application process (and usually, forfeiting your security deposit(s) in the process), or paying a reletting fee (typically equivalent to 2-3 months’ rent), but your options will vary from state to state and lease to lease.
How to Maximize Tax Benefits
If you’re moving because of a job, you can potentially write off the costs on your next tax return. To qualify, you have to pass these tests:
The 50-mile test: The distance between your new job and your former job must be at least 50 miles greater than your previous commute. If your old job was 15 miles away from your house, and your new job was 60 miles away, it wouldn’t pass this test — but if the distances were 5 and 70 miles, respectively, then it would pass.
Rule number two is that you need to be employed, full time, in the general area of your new job location for at least 39 weeks during the 12 months after you move.
If you’re a sole proprietor or a partner, you can transfer yourself and deduct the cost, as long as you meet the first two tests and also a third test, which requires that you work full time in the new area for at least 78 weeks during the two years after you move.
When it comes to what you can deduct, you can write off most costs — but not quite everything.
Here’s the list of deductions:
- The cost of packing and shipping your possessions, including insurance and up to 30 days of storage
- The cost of traveling to your new home once (including lodging, but not meals, and driving costs, like gas and oil, or a mileage deduction of .19/mile for moves in 2016 if you don’t want to track those costs)
- The cost of disconnecting utilities at your old home and hookups at the new home
You can fill all of this out on IRS form 3903, Moving Expenses — though if you file electronically through a tool like TurboTax, you can just tell it you moved and it’ll walk you through the appropriate questions. And no double dipping: you’re not allowed to deduct any moving costs that were paid for by your employer. Also, we should mention that if you’re selling your home, there’s a bunch of tax implications for selling a home too.
What’s the best transportation option?
Typically, for long-distance moves, your moving options are:
Professional movers or moving companies. The upside of this is that it’s definitely the easiest option — you’ll have to do the least amount of work. The downside is that it’s also usually the most expensive option (but, depending on the relocation benefits you can negotiate, it might be covered). Moving.com, 123Movers, and Movers Directory can let you compare quotes from different moving companies quickly and easily.
Shipping containers/storage. With services like UBox or PODS, the company delivers a shipping container to you, you pack it yourself, and then it’s delivered to your new location. This costs less than professional moving but requires more work on your end. If you want to go this route, uShip can give you estimates from various providers.
Driving a rental truck or van. Renting a truck or van with a company like U-Haul, Penske, or Budget and driving it yourself. With the fees that are added for one-way trips, insurance costs, and the added cost of having to stay at a hotel if the drive is too long to do in one day, this often costs almost as much as a shipping container. If you have your own car, a shipping container probably makes more sense, but if you don’t have a car (and would have to rent one to do the trip anyway), or if you have two people doing the trip together (you and your partner, for example) that can take two separate vehicles, then renting a truck might make more sense.
If you need help navigate the finer details of your move, The FlatRate blog has a smorgasbord of tips for moving, including articles on unexpected moving expenses, packing, and finding cardboard boxes to put everything in.
A Checklist of the Less-Tangible Factors to Consider
While you’re thinking about the logistics of completing your move, it’s easy to forget the less tangible factors that should be considered. Don’t forget to think about:
Your relationship: If you’re married or in a long-term relationship, how will moving affect it? Is your partner ready to move, or are they well set up in your current city? If they aren’t 100% on board and it could cause a rift in the relationship, take that into account.
Children, current or future: If you already have children, you’ll want to look into how the schools in your new city stack up (GreatSchools can help with this), and take school districts into account when looking at locations for housing. If you want to have children soon, you’ll need to take all of that into consideration, plus look at parental leave policies and options with the company you’re considering an offer from, and look into childcare costs in the new city. If you’ll be further away from your family, you’ll also want to consider the potential loss of their help in the first few months after childbirth, which can be difficult.
The stability of the company: This can vary wildly depending on industry — if you’re working with startups, the level of stability is going to be very different than if you’re working with public schools. Look at the company’s history, take into account how old (or new) they are, and do your research on how long similar companies have lasted (and why they failed).
Weather: If you’re used to an extremely sunny climate, moving to someplace like Seattle or Portland could be a rough transition, especially if you have any tendencies towards seasonal affective disorder. If you’re going to do a change like this, familiarize yourself with the signs of vitamin D deficiency and/or SAD, consider buying a blue light to offset the winter darkness, and check out this list of other tips from Lifehacker to get through a long winter.
Above everything else, if you’re buying a home in your new city, you’ll need a fantastic agent — our real estate agent database is a great place to find one.