What is a home housing norm deduction and how is it applied?
Need to get up to speed on home housing norm deductions? Judy Lam, a global mobility advisor in Plus’s Hong Kong office, tackles this topic.
Complete transcript: “Hi, I’m Judy Lam, relocation counselor from Plus Relocation. Today I am going to talk about the home housing norm deduction, what it is, how it gets calculated, and how it gets implemented.
When a company sends an employee on assignment for more than a year they usually provide housing support that addresses home and host locations. Often it is more cost effective to pay a housing allowance or to mail it directly to the landlord for the housing and the host location. Instead of paying all the housing costs, the company expects the employee to contribute to these expenses.
Most assignment policies try to make things equalize for the employee. The company looks to the employee to contribute the same amount for the new housing at the host location as they were paying back home. This contribution can be calculated and deducted from the employee’s wage offsetting the overall housing cost for the company. There are a few ways for a company to calculate these deductions.
To get the exact employee’s previous contribution the company needs the employee to provide their monthly housing cost such as mortgage payments and rental expenses. However, most companies sometimes find this invasive so instead the company will purchase a calculation from an industry data source which is usually used to calculate other allowances such as cost of living allowances. Once the amount is determined and agreed upon it is often deducted as monthly payroll withholding or from assignment allowances.
Now you have a better understanding of home housing norm deductions. Thank you for watching.”