IRS Tax Relief for Hurricane Victims

10 10 2017

The Internal Revenue Service (IRS) offered a rundown of key tax relief available to victims of Hurricanes Harvey, Irma and Maria. In general, the IRS relief to individuals and businesses applies anywhere in Florida, Georgia, Puerto Rico and the Virgin Islands, as well as parts of Texas.

Because the relief postpones various tax deadlines, individuals and businesses have until Jan. 31, 2018 to file any returns and pay any taxes due. Those eligible for the extra time include:

  • Individual filers whose tax-filing extension runs out on Oct. 16, 2017. Because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief, it only impacts the filing
  • Business filers, such as calendar-year partnerships, whose extensions ran out on Sept. 15, 2017
  • Quarterly estimated tax payments due on Sept. 15, 2017 and Jan. 16, 2018
  • Quarterly payroll and excise tax returns due on Oct. 31, 2017
  • Calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017

variety of other returns, payments and tax-related actions also qualify for additional time. The IRS also continues to closely monitor the aftermath of these storms, and additional updates for taxpayers and tax professionals will be posted to IRS.gov.

Besides extra time to file and pay, the IRS offers other special assistance to disaster-area taxpayers. This includes the following:

  • Special relief helps employer-sponsored leave-based donation programs aid hurricane victims. Under these programs, employees may forgo their vacation, sick or personal leave in exchange for cash payments the employer makes, before Jan. 1, 2019, to charities providing relief. Donated leave is not included in the employee’s income, and employers may deduct these cash payments to charity as a business expense.
  • 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to hurricane victims and members of their families. Under this broad-based relief, a retirement plan can allow a hurricane victim to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or dependent who lived or worked in the disaster area. Hardship withdrawals must be made by Jan. 31, 2018.
  • The IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due during the first 15 days of the disaster period. Check out the disaster relief page for the time periods that apply to each jurisdiction.
  • Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year), or the return for the prior year (2016). See Publication 547 for details.
  • The IRS is waiving the usual fees and expediting requests for copies of previously filed tax returns for disaster area taxpayers. This relief can be especially helpful to anyone whose copies of these documents were lost or destroyed by the hurricane.
  • If disaster-area taxpayers are contacted by the IRS on a collection or examination matter, they should be sure to explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Further details on these and other relief provisions can be found on the agency’s disaster relief page, as well as on the special pages for Hurricane Harvey and Hurricanes Irma and Maria. For information on disaster recovery, visit disasterassistance.gov.

Source: Florida Realtors

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Congress Considers Post-Hurricane Flood Insurance Programs

9 10 2017

For the first time since 2005, four hurricanes have made a U.S. landfalls in a single hurricane season in over a decade.

The path of destruction in Texas, Florida, Puerto Rico, and Mississippi in the aftermath of Hurricane Harvey, Irma, Maria and Nate is catastrophic and there is an enormous financial jam facing the National Flood Insurance Program.  There has never been a greater need for the program. But that need has also set off a new round of calls to dramatically overhaul a program that hasn’t been able to sustain itself without major subsidies from the U.S. Treasury.

Established in 1968 to help homeowners living in flood-prone areas that private insurers wouldn’t cover, the National Flood Insurance Program (NFIP) has never been on steady financial footing, and continued construction in low-lying areas — as well as more frequent and powerful storms attributed to climate change — have put the NFIP deeply in the red.

As a result, Congress repeatedly finds itself re-authorizing new money to support the program. Even before Hurricanes Harvey and Irma, the program was set to expire on Sept. 30, and no new insurance policies can be written until it’s re-authorized again. 

Few home insurance policies cover flood damage, and nearly all U.S. flood insurance policies are issued through the program. To qualify for national flood insurance, a home must be in a community that has agreed to adopt and enforce various policies to reduce flooding risk.  

It’s hard to find a member of Congress who will call for an outright abolition of the program, which would likely destabilize real estate markets and property tax bases in those areas. So the aim among some legislators is to pass laws that will encourage homeowners to move into the private market.

One option is to raise the premiums for government insurance to help sustain the program, discourage new construction in high-risk areas and hope that as rates rise, more private companies will enter the flood insurance market.

The fear of many lawmakers who represent these homeowners is that a substantial rise in rates will be more than some can afford. 

The issue had the potential to become a crisis as congressional insiders worried that re-authorizing the program could get tangled up in fights over raising the debt ceiling and funding the government. But to the surprise of nearly everyone, President Trump cut a deal with Democratic leaders to re-authorize the program for the short-term and push all of those big decisions into December. 

Now, activists and member of Congress who want to overhaul the flood insurance program have an opportunity to make their case over the next couple of months.

They argue that government-subsidized insurance encourages more people to build in flood-prone areas — which then forces the government to rebuild their homes after every flood at taxpayer expense.

Those advocating an overhaul include taxpayer watchdogs, environmentalists, insurance companies and members of Congress who oppose bailing out areas that allowed building in flood-prone areas. They’re pushing for legislation that requires better flood plain mapping that takes climate change into account, stricter building regulations requiring measures like elevating homes and buildings to reduce flood risk, and setting sustainable insurance rates that won’t shock the market.

A powerful trifecta of interests groups comprised of bankers, real estate agents and home construction companies have fought these efforts. 

Back in 2012, former President Obama signed into law a major Congressional overhaul of the flood insurance program. Among the changes: eliminating subsidies for homes that are repeatedly damaged by flooding. 

But some homeowners and their representatives in Congress protested the steep price increase. In early 2014, Congress and Obama reversed course, passing into law a cap that would limit premium increases and mostly unwound the 2012 efforts. 

Now, many House members are pushing to let the private market take over the job of insuring properties in flood zones.

Supporters of the legislation in the House say they are undeterred, believing it’s the most popular proposal for changing the program and will inevitably pass.

For now, no one on Capitol Hill seems inclined to increase the misery of those affected in Houston by drastically changing the flood insurance program for those who are currently filing claims. And the Florida and Texas delegations have vowed to combine their legislative firepower to protect their constituencies — members from both parties say protecting the program is a key priority.

Source: The Eagle (Bryan-College Station, TX.)

 





Hurricanes and Real Estate Contracts

3 10 2017

Florida residents enjoy weather that many northern neighbors envy: warm temperatures all year, combined with easy access to breezy oceans, lakes, rivers and springs.

However, the weather here occasionally turns sinister, most notably when hurricanes meander across the Atlantic to wreak havoc on our state.

When these hurricanes impact real estate transactions, many Realtors scramble to locate casualty and bad weather provisions. This short inventory provides an overview of key provisions in the Florida Realtors/Florida Bar “AS IS” Residential Contract for Sale and Purchase revised in April of 2017, along with one reference to the casualty provision contained in the Florida Residential Landlord and Tenant Act.

  1. Section 18(G) Force Majeure
    This is an automatic extension that comes into play when a dramatic event prevents a party’s performance or closing from happening. It takes an unusual and unplanned event to trigger this “Force Majeure” clause, as you can see from a few of the examples given, such as, hurricanes, acts of God and acts of terrorism. Once the clause is triggered, though, certain time periods (including the closing date, if applicable) will be extended for a reasonable time up to 7 days after the force majeure no longer prevents performance. Parties should pay attention to the time in relation to the closing date, though, since either party may terminate the contract by delivering a written notice if force majeure continues to prevent performance more than 30 days beyond the closing date.
  2. Section 18(L) Access to Property to Conduct Appraisals, Inspections, and Walk-Through
    After a hurricane passes over a property, a buyer often wants to take another look at the property, regardless of whether the buyer is still in the inspection period. This clause generally favors the buyer’s request, as it provides that “Seller shall, upon reasonable notice, provide utilities service and access to Property for appraisals and inspections, including a walk-through (or follow-up walk-through if necessary) prior to Closing.”
  3. Section 18(M) Risk of Loss
    If the buyer or seller discover casualty damage from the hurricane, this clause describes the rights and obligations of each party. If the cost to restore the property does not exceed 1.5% of the purchase price (this cost includes the cost of pruning or removing damaged trees), then the cost is a seller obligation. If the restoration isn’t complete prior to closing, the seller will escrow a sum equal to 125% of the estimated cost to complete the restoration. If the cost of restoration exceeds 1.5% of the purchase price, then buyer has the option to either take the property along with 1.5% of the purchase price, or receive a refund of the deposit, releasing buyer and seller from all further obligations under the contract.
  4. Section 83.63, Florida Statutes (Casualty Damage)
    This brief section simply provides that if rented residential premises are damaged or destroyed “so that the enjoyment of the premises is substantially impaired, the tenant may terminate the rental agreement and immediately vacate the premises.” This section continues to present a second scenario whereby a tenant may “vacate the part of the premises rendered unusable by the casualty, in which case the tenant’s liability for rent shall be reduced by the fair rental value of that part of the premises damaged or destroyed.”

Source: Florida Realtors, Florida Realtors Legal Hotline





$250K Home Giveaway Sweepstakes for U.S. Military or Veterans

28 09 2017

Realtor.com® and Veterans United Home Loans, a U.S. Department of Veterans Affairs (VA) purchase lender, have teamed up to launch a $250,000 Veterans Day Home Giveaway Sweepstakes.

The contest will award up to $250,000 toward a home purchase to a U.S. military service member or veteran.

Veterans and current members of the military can enter the sweepstakes until Oct. 29 at realtor.com/homegiveaway.

The winner will be announced on Veterans Day, Nov. 11.

The winner will receive $250,000 (less tax withholding) at the closing of a home purchase transaction.

For more details, go to https://www.realtor.com/homegiveaway/rules.

Source: Realtor.com®





Big 6 Tax Cut from the New GOP

27 09 2017

President Trump and the congressional Republican leadership released their newest highly-promoted tax plan on 9/27/17. Although the president promised it would be a “very comprehensive report,” it is in fact only a broad outline that is silent on key details. It sketches out big tax cuts for businesses and high-income households, modest tax cuts for middle-income taxpayers, and simplification of the individual tax code—all of which would reduce federal revenues by trillions of dollars over the next decade.

Here are six key takeaways from the framework:

It is not a plan. Much like the White House effort last April, it is little more than a rough outline. Trump is approaching tax reform very differently than President Reagan, who kicked off the debate over what would become the Tax Reform Act of 1986 with a comprehensive opening bid.  Wednesday’s document leaves out many crucial details. It even fails to identify individual tax brackets (it describes the rates but not the income levels to which they’d apply). Oddly, it describes three individual income tax rates—12-25-35–then says a fourth higher bracket “may apply.”

It isn’t tax reform. It is a tax cut. There is no plausible way Congress can fully fund all of the tax cuts in this outline while complying with its constraints on revenue-raisers. Businesses would receive the biggest tax cuts, which would ultimately benefit the highest income households.

It leaves the dirty work to Congress. The framework highlights tax cuts—for corporations, pass-through businesses, and many (if not most) individuals. Yet, it fails to identify a single individual tax preference it would eliminate. Despite early rumors to the contrary, it is even silent on the state and local tax deduction.

The outline does explicitly identify those tax breaks the authors would protect, including such big-ticket preferences as the deductions for mortgage interest and charitable giving, as well as tax subsidies that “encourage work, higher education, and retirement security. “ Similarly, it identifies only one business-side revenue-raiser, a “partial” limit on interest deductibility, while promising to preserve business credits for research and low-income housing.

It would mostly benefit very high-income households. It may cut taxes modestly for some middle-income households, but it appears to be a far bigger tax cut for high-income households. Individual rate cuts, repeal of the Alternative Minimum Tax and the estate tax, and preservation of tax preferences for charitable giving, mortgage interest, and retirement savings all primarily benefit those with high-incomes. Tax cuts for corporations and, especially, pass-through businesses, would mostly benefit the highest-income households.

It would simplify the individual income tax. By doubling the standard deduction and repealing the individual AMT, it would make filing simpler for millions of taxpayers. The framework also calls for simplifying the tax treatment of education and retirement savings, a long overdue idea. However, as with so much else, it says nothing about how.

It would not generate three percent economic growth.  Despite the president’s promises, it is implausible that this plan would permanently boost the economy. Trillions of dollars in lost revenue would add to the federal debt, raise interest rates, and make it more costly for businesses to invest. Those costs would offset the benefits of lower corporate tax rates and expensing.

However, those beneficial provisions are less generous in this plan than in earlier Trump proposals that included even lower corporate tax rates and a provision to allow firms to fully–and permanently– expense their capital investments in the year they are acquired. Some analysts argued the expensing provision alone would significantly boost growth. But today’s framework would permit expensing for only five years—a provision that may accelerate the timing of new investment but do little or nothing to increase the long-term capital stock.

This tax framework tilts more closely to the plan proposed by the House Republican leadership in 2016 than it does to past Trump ideas. But by saying so little about how the president would pay for big tax cuts, this framework gives Republican lawmakers no political cover on the many tough choices they face. Thus, for all the hype, it barely moves the ball at all.

Source: Forbes





Florida ranks 12th for economic health, 13th for economic activity.

6 06 2017

Economic growth varies from state to state, according to WalletHub’s analysis of its latest study on economic health. Out of 51 rankings (including Washington, D.C.), however Florida ranks 12th for “economic activity.”

The personal-finance website WalletHub conducted an in-depth analysis of 2017’s Best & Worst State Economies. In order to determine America’s top economic performers, WalletHub says its analysts compared the 50 states and the District of Columbia across 27 key indicators of economic performance and strength.

Overall Florida rankings (1=best, 25=avg.)

  • Economic activity: 13
  • Economic health: 12
  • Innovation potential: 30

Florida’s total score was 54.48. Washington ranked at the top with 76.54 followed by California with 73.78. At the bottom of the list, West Virginia ranked 28.14, with Louisiana one slot higher at 33.22.

Economic performance of Florida (1=best, 25=avg.)

  • No. 5 – GDP (gross domestic product) growth
  • No. 37 – Exports per capita
  • No. 2 – Startup activity
  • No. 35 – Percent of jobs in high-tech industries
  • No. 39 – Annual median household income
  • No. 3 – Change in nonfarm payrolls (2016 vs. 2015)
  • No. 23 – Government surplus/deficit per capita
  • No. 31 – Unemployment rate

Source: Florida Realtors, https://wallethub.com/edu/states-with-the-best-economies/21697/





How to Prepare to Be a Homeowner

31 05 2017

Ready to Become a Homeowner?

What to Keep in Mind as You Leave Renting Behind

Each year, millions of Americans purchase a home. In 2015, that was about 5.2 million, according to the National Association of Realtors, and about 35% of them were first-time buyers. If you’re anything like those millions, you’ve been waiting for the moment you finally feel ready to become an owner yourself. You’ve probably carefully considered your budget, your rising rent, and your future prospects — do you plan to move or have kids in the next few years? Can you get by with a two-bedroom, or should you spring for three?

While you’re weighing your needs with your means, there are a few other components of the transition to keep in mind.

  1. Down Payment

Surely you haven’t overlooked this massive expense, which remains one of the biggest obstacles for hopeful homebuyers. Although you can negotiate the terms of your loan, depending on your credit score, you should plan to have 10% to 20% of your future home’s value saved up for a down payment — plus a few thousand more so you can be prepared for unanticipated repairs or other financial hiccups. If that seems impossible, the Federal Housing Administration has a program for first-time homebuyers, offering loans with down payments as low as 3.5%. However, with that small deposit comes larger monthly payments, and a larger amount paid by the end of the loan. Smaller down payments also result in another monthly cost: private mortgage insurance, which lenders sometimes require to protect themselves from loss.

  1. Closing Costs

Yes — there’s even more cash that comes into play when you finalize your home purchase. The down payment goes toward the home’s value, but then there is also a cluster of smaller fees that get thrown into the “closing costs” bucket: loan origination fee, credit report, loan underwriter, home inspection and appraisal, title search, survey fee, and taxes (on the sale, not property taxes), and other assorted fees delineated by your real estate agent. Fortunately, you’re not looking at another $30,000 — unless you’re planning to buy a $1.5 million home. Your closing costs will typically add up to between 2% and 5% of the home’s value.

  1. Insurance

As a renter, you probably paid a monthly insurance premium to make sure your personal belongings were protected in the event of a fire or other accident (at least you should have). And those premiums were probably pretty cheap. Your homeowners insurance premiums, however, will be quite a bit higher, and that’s because it has more to cover aside from the extra square footage. Homeowners insurance will financially protect you from damages incurred to your home, and all of your belongings inside of it, from damage caused by wind, hail, ice, fire, and more.

  1. Taxes

This is another one of the costs that discourages a lot of renters when they begin to consider owning. But property taxes don’t have to be scary, or even that expensive. Familiarize yourself with the local tax rate before the purchase, and then set aside money in an escrow account each month so that you have enough to make the payment when it comes due, instead of scrambling into your savings. Many lenders require this escrow account. When they’re due — and how often — depends on your location, but the average U.S. household pays just over $2,000 in annually.

  1. Maintenance

Time to start filling up that garage: Get a lawnmower, shovel, weedwacker, rake, or any other implement you’ll need to keep your property attractive and safe in every season. Additionally, plan to spend about 1% of your home’s value on annual maintenance projects, which can range from new batteries for your smoke detector to replacing your hot water heater or significant replumbing. Even brand-new houses aren’t immune to maintenance costs, so keep a devoted savings account at the ready — and don’t overlook your duties. Create (or find) a maintenance checklist and schedule to stay on top of important upkeep.

This article was provided by Sam Radbil, a contributing member of the marketing and communications team at ABODO. ABODO Gainesville apartments was founded in 2013 and is headquartered in Madison, Wisconsin.








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