Can My Company Rent An Apartment For Me?

It is not completely unheard of to find employers paying rent or providing housing for their employees. There are varying reasons why companies may opt to do this, but it is usually for the benefit of the employer and the employee.

Can my company rent an apartment for me? Yes, depending on the company that you work for, there are perks such as employer housing or paid rent that you may have access to. One of the reasons why some companies may choose to take care of rent expenses is convenience. Some organizations such as institutions of higher education typically require on-site staff. Some companies may also opt to pay rent simply to encourage employees to stay longer at their jobs.

Paying rent or generally providing housing for employees is a strategy that is generally meant to help out the employees but still benefit companies at the same time.

Table of Contents

Why your company may opt to pay rent?

1. Payment of rent in order to entice employees to extend their stay

Some companies are usually willing to pay rent for employees or provide free housing in order to get them to keep working at their premises. This is especially true if the employee is planning to relocate due to the lack of accommodation and they are highly valued by the company.

2. Paying rent or providing housing in a particular setting

There are some settings where employers benefit greatly from covering the housing expenses of employees. If you work in institutions of higher learning such as universities or colleges, rent-free housing can serve as a valuable recruitment tool. Additionally, staying in paid for apartments provides an opportunity for the staff to spend more time on campus and generally improve the experience.

3. To reduce the commuting distance

Your place of work may opt to pay the monthly rent for an apartment in order to eliminate the need for time-wasting commutes. It is not uncommon for companies to opt to pay for apartments that are in close proximity to their premises in order to encourage you as an employee to give up your unit that is far away. This may be done in order to improve your productivity at work, especially if you are a highly valued employee.

4. Paying rent due to undue hardship

Housing may be provided to employees if they have certain disabilities that they may hinder them from finding an apartment in a conventional setting. Some companies also go out of their way to pay rent for older employees who may have trouble accessing their business premises due to the distance.

5. Rent payment in a temporary work location

The company you work for may pay your rent if you are working in a location that is not your permanent residence. For example, if you work in Phoenix, Arizona for a major portion of the year but your permanent residence is in Philadelphia, your employee may pay rent for the period that you are in your city of work.

6. Your job requires you to be available for duty consistently

Some jobs may require an employee to be in close proximity to the business premises at all times in order to perform your job effectively. This is usually included in the terms of your employment, and there is usually an agreement between you and your employer before you take the job.

Employee benefits are typically taxable since they are considered to be part of your income. However, benefits such as employee housing may be exempt from additional taxable compensation if they meet the following criteria:

Employer housing options

1. The monthly rent is paid for the convenience of the employer

In order to enjoy this exception, the apartment that you stay in must meet the following criteria:

It is provided in order to preserve the business interests of the employer – Even if your employment contract includes a written statement about your living situation, it may not be enough to meet this criterion. In order to qualify, there must be a direct connection between your apartment and the business interests of the company or your employer.

It is a requirement in your employment contract – If you have to live in an apartment in order to carry out your responsibilities at work effectively and you don’t have the option to accept cash instead of the unit, exclusion from taxation can then be applied. Acceptance to live in an apartment due to condition/terms of employment is usually in the form of an agreement with your employer at the beginning of employment. An example of a situation where you have to live in employee housing is if you have a job that requires you to be available for work at all times.

The apartment provided is on the business premises of the company that you work for – Not only must your employer own the premises, but the apartment that you live must also be an integral part of the business property. For example, if you work within an institution of higher learning, the apartment that is provided needs to be situated within the campus.

In order for your apartment to receive the nontaxable treatment under these requirements, your employer is required to file the necessary documentation. The documentation may contain the following information:

Your responsibilities as the employee.
A brief description of the apartment provided.
Reasons why you need the apartment in order to effectively perform your responsibilities.
The terms of employment provided in the employment contract.
A comprehensive list of taxable or nontaxable utilities and services provided in the apartment.

In cases where the apartment provided is not situated within the main business premises, it is necessary to maintain a log of business use of the unit in order to provide evidence that work-related activities are carried out in the apartment.

2. Your place of work is not your permanent residence

The company you work for may cover your monthly rental expenses if you are posted to work temporarily on a project that is not within your normal work area. In order for the temporary work location factor to be taken into consideration, there are many aspects that have to be looked at:

Your job must require traveling a significant distance from your home where you usually carry out your regular duties. This includes the general area or entire city in which the place of work is situated.
The project you are assigned to work on must not last more than one year. If you are unsure of when the assignment will end or it is expected to last more than a year, the temporary apartment will be recognized as a tax home and the rent paid will be taxable unless other criteria are met.

Your main home or tax home can be determined based on the number of hours, level of activity, and source of income at each location. For example, if you have to live in an apartment situated in Miami for eight months earning $50,000 at your temporary job but you choose to keep your home in New York where you earn $20,000 for the rest of the year, then the unit you have in Miami does not qualify for tax-free treatment. However, if you are hired to work on a specific project that is expected to last less than a year and you can additionally prove that your tax home remains in New York, then the apartment in Miami may qualify for tax-free treatment.

3. The apartment that is paid for is within an educational institution

There are educational institutions and academic health centers that provide their employees with paid for apartments or discounted rental rates. Exemption from taxes is provided for approved apartments within the premises of an educational system within for amount in excess of the lesser of:

Five percent of the appraised value of the approved apartment
The average rent you pay for housing provided by the educational institution (fair market value of the property)

For example, if you work in a college that owns apartments within the premises or near the campus and you can live in it rent at a discounted rental rate, there is usually a nontaxable benefit (the 5% of the appraised value) that is excluded from taxable income.