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I thought I was so smart. I’d read several articles on Ask Admin (intranet only) on using my lodging per diem during my 11-month long language training towards the mortgage interest, property tax, and condo fees on a new place I’d buy in DC. The answers seemed pretty clear: so long as I was purchasing the home for the express purpose of residing it I could get reimbursed up to the per diem limit [see Arensburger]. So, I was kinda surprised when the voucher folks denied my first voucher which had some $1500 in mortgage-related costs on it. At first, they withheld the whole $7000-odd reimbursement, saying that charges on a HUD-1 couldn’t be paid out of per diem funds. After taking it up the chain, they funded all but the $1500 that was on the HUD-1. I appealed to the Civilian Board of Contract Appeals. After five months, the judge ruled on my side – you can see all the details here.
The two lessons: 1.) In payroll issues, there’s an administrative appeal to decisions that don’t jibe with the regs; and 2.) buying a house on per diem can save you a good deal of cash. Even though it’s on the sliding scale, I’ve saved over $6,000 in interest payments and my furniture rental and utilities were included while I was still above 25%. I’m not sure on the tax liability yet, but it looks like the interest payments are also available as Schedule A deductions. Huzzah!
Tags: CBCA, GSBCA, home ownership, mortgage interest, per diem, TDY
12 Responses to “Buying a house on per diem”
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March 28th, 2008 at 9:04 am
[...] Buying a house on per diem [...]
December 24th, 2008 at 12:11 am
Hi there, I’m starting as a junior FSO in January and have been so confused by all the regulations on compensation for buying a home. I want to make sure that I do everything right so I can be reimbursed for the costs I expect the DOS to cover. I have the itemized closing costs and the limit, but I don’t understand the proper way to maximize on per diem for mortgage interest and taxes (not principle). Any help you can give would be appreciated.
January 19th, 2009 at 5:35 am
Unfortunately, there’s no way to “maximize” your per diem; unlike renting there are fewer ways to front-load mortgage interest or property taxes. The interest-only loan is a dying breed given the credit crunch, but that would be one way to minimize your out-of-pocket expenses for housing.
Remember, though, as a new JO, you’ll only get per diem if you are hired from further afield than 50 miles from the Washington Monument AND you don’t know how long you’ll be in DC until flag day comes about. With as many other changes as you’ll have to manage, you might want to think twice about also managing a home purchase (and finding renters!) in your first weeks on the job.
January 19th, 2009 at 7:35 pm
On a related topic, what determines if one is a local hire who qualifies for per diem or not? I was living in Washington at the time I first submitted my application, but will be moving away from the city this year. Do you know what would be required to “prove” that I have to relocate back to DC, in terms of a lease or a certain number of months at a new address? It’s likely a moot point, but I don’t want to get screwed just because of poor timing.
Thanks!
January 20th, 2009 at 3:12 am
You’ll have to talk to your HR tech (and you might smooth the way by registering your new address with them), because they make the determiniation if you’re within the 50-mile range. There was a guy in my A-100 class who lived in Frederick, MD, and had to make the LONG commute each day because he was at 49.5 miles or something like that. However, another friend who had been a trailing spouse was counted as a non-local hire, even though she was at FSI already, because they were on post-to-post orders (if memory serves she actually went out to post for a week before turning around and coming back). In the end, I think this is one of those rare spots where common sense actually prevails: if you legitimately moved away from DC, you shouldn’t have an issue. If you’re moving away just to get a few thousand bucks per diem, they’ll end up doing the right thing and denying it.
January 20th, 2009 at 4:38 pm
Makes sense, thanks. The whole per diem concept is new to me, so I’m trying to gather info. Although I do have to point out that the daily meal allowance alone amounts to more than the salary of my last job – hopefully someday I’ll be in a position to shrug that off as “just a few thousand bucks.”
February 22nd, 2009 at 4:41 pm
If you are moving back to DC to start A-100 then you’ll have travel orders authorizing travel and per diem, and therefore you won’t be a local hire. Also, remember that per diem drops after 1 or 2 months in DC.
March 10th, 2009 at 10:18 am
Does anyone know whether the sliding per diem scale start the first day at A-100 or does it reset when you get assigned to language training?
March 21st, 2009 at 6:55 am
Unless the rules have changed, the sliding scale does not/not change when you get assigned to language training – nor does locality pay kick in for local hires (I was, when hired, the lowest-paid FS generalist starting at the lowest grade and class with no locality pay and no per diem). Since you don’t find out your training schedule until about seven weeks in, you’ll need to plan for all possibilities. I’ve not personally done it, but the deal with the Oakwood Apartments allow you to stay for up to a year on per diem – otherwise most people are able to negotiate six-month leases in DC and move after the heady $200/day rates expire.
April 3rd, 2009 at 4:33 pm
Thanks! I figured.
If you’re coming from more than 50 miles away, do you get locality pay and per diem while in A-100? I have seen conflicting reports.
May 24th, 2009 at 9:40 am
This is a phenomenal post. I’m going on on long-term language TDY soon and have been thinking about doing the same thing. Can you recommend any specific AskAdmin articles that go into more depth about what does and doesn’t count, etc.? Thanks!
May 30th, 2009 at 12:28 am
What is defined as “legitimate”? I’ve been out of work for many months (still searching) and am moving home (out of the DC area) to cut down on expenses/spend time with my family/keep job searching in the (very happy) event I do get the call. This is something I would have done without per diem. Could I be denied this benefit for this reason?