Investor Report: Tax Extender Act
by Kenneth R. Harney
Real estate investors are facing a squeeze play on Capitol Hill, with important tax incentives nearing an end-of-the-year deadline.
Last week the House approved what's known as the Tax Extender Act, a Christmas tree bill filled with nearly 50 tax program extensions beyond their December 31st scheduled expiration date.
Two of the extenders are especially significant for investment real estate: First is the so-called "leasehold improvements" provision, which allows owners of commercial, retail, hotel and office buildings -- large and small -- to use an accelerated 15-year depreciation schedule in writing off renovations and upgrades they make to their real estate.
The House bill extends favorable leasehold writeoffs for another year.
The second key one year extension in the bill involves depreciation writeoffs for developers who clean up so-called "brownfield" sites that have experienced environmental damage from toxic chemicals or pollution.
But the House bill also contains a massive penalty for real estate, a multi-billion dollar tax increase for investors in real estate partnership deals.
The House bill would remove favorable capital gains treatment that now exists for a type of compensation that general partners frequently receive, known as "carried interest," and instead tax it at ordinary income tax rates.
For many investors functioning as general partners, that would mean a crushing tax increase -- more than double their tax rates overnight.
Though strongly opposed by housing, real estate and other financial market groups, the extender bill with the "carried interest" tax change has now gone to the Senate for a vote.
And that's where the deadline squeeze comes in. The Senate already has a jampacked year-end schedule dominated by health care, and is not likely to take up the tax extender bill before December 31st.
As a result, the popular leasehold improvements and brownfields tax programs are likely to expire, effectively go into limbo, as of January 1st.
Real estate industry legislative analysts say the Senate could take up the tax extenders bill as early as January or February, but will probably not accept the House's controversial carried interest changes.
Should investors worried about the expired tax benefits get upset?
Not quite yet, lobbyists tell Realty Times. If the Senate can quickly cobble together some alternative tax increases to satisfy the House, the extender bill is likely to pass sometime early in the year with a January 1 retroactive date - minus the tax increase for real estate partnerships.
Then again, nothing is certain on Capitol Hill.
So talk to your tax advisor before committing to investment decisions that might be affected by the expiration.
Published: December 18, 2009
Where The Term Real Estate Come From.
A Brief History And Origins of Real Estate.
Definition: Real Estate
Continue from previous post.
The Industrial Revolution.
The industrial revolution was one of the great equalizers in human history, The use of machines for manual labor freed many peasants for different tasks, and allowed a privileged few time for education and specialization into new fields of labor opened up by the mechanization of industry. Cobblers, seamstresses and cabinetmakers found that their once invaluable skills were now obsolete, leaving them to return to the land and the coal mines beneath it to try to eke out a living.
People were able to jump classes and bring some of their lower class sensibilities with them, leading to track housing for laborers and a range of products aimed at the lower classes.
The people who made up the classification of peasants now became middle class, blue collar, white collar, and a handful of other things. They owned houses, cars, and eventually, radios and televisions, which suggested what other things they might want to own.
Economic aspects of real property:
Land use, land valuation, and the determination of the incomes of landowners, are among the oldest questions in economic theory. Land is an essential input (factor of production) for agriculture, and agriculture is by far the most important economic activity in preindustrial societies. With the advent of industrialization, important new uses for land emerge, as sites for factories, warehouses, offices, and urban agglomerations.
Also, the value of real property taking the form of man-made structures and machinery increases relative to the value of land alone. The concept of real property eventually comes to encompass effectively all forms of tangible fixed capital. with the rise of extractive industries, real property comes to encompass natural capital.
Mortgages in Real Estate.
The invention of mortgages belongs to no particular country. Mortgages existed for a long time as an exclusive loan given only to nobility. After the industrial revolution, however, the wealth of the world increased to the point where banks opened themselves to "higher-risk" mortgage loans to common people. This allowed individuals to own their own homes and, if they so desired, to become landlords themselves. It took 30,000 years, but home ownership is now open to many people.
Mortgages in developing countries.
In recent years, many economists have recognized that the lack of effective real estate laws can be a significant barrier to investment in many developing countries. In most societies, rich or poor, a significant fraction of the total wealth is in the form of land and buildings.
In most advanced economies, the main source of capital used by individuals and small companies to purchase and improve land and buildings is mortgage loans (or other instruments). These are loans for which the real property itself constitutes collateral. Banks are willing to make such loans at favorable rates in large part because, if the borrower does not make payments, the lender can foreclose by filing a court action which allows them take back the property and sell it to get their money back. For investors, profitability can be enhanced by using an off plan or pre-construction strategy to purchase at a lower price which is often the case in the pre-construction phase of development.
But in many developing countries there is no effective means by which a lender could foreclose, so the mortgage loan industry, as such, either does not exist at all or is only available to members of privileged social classes.
Real Estate Business in Latin America.
The real estate business in Mexico and Central America is different from the way that it is conducted in the United States.
One important difference from the United States is that each country has rules regarding where foreigners can buy. For example, in Mexico, foreigners cannot buy land or homes within 50 km of the coast or 100 km from a border unless they hold title in a Mexican Corporation or a Fideicomiso (a Mexican trust). In Honduras, however, they may buy beach front property directly in their name. There are also different special rules regarding certain types of property: ejidal land - communally held farm property- can only be sold after a lengthy entitlement process, but that does not prevent them from being offered for sale.
In Costa Rica, real estate agents do not need a license to operate, but the transfer of property requires a lawyer.
Influence of Real Estate on the economy and people.
Ownership, specifically ownership of land, was the basis of all the investment opportunities we see today. Without a stable population and a set location, trade and commerce between groups is limited. Ownership has moved from being established by strength to being something you can buy, sell, trade and rent. There has always been a trade off for tenancy, a fee paid to the "owner" for the land and its protection. This responsibility was first afforded to tribal leaders, then to kings and finally to landlords. Now we have the power to own our homes, a move that has changed the way people live.
Categories of estates
Estates in land can be divided into five basic categories:
Where The Term Real Estate Came From.
A Brief History And Origins of Real Estate.
Definition: Real Estate A piece of land, including the air above it and the ground below it, any buildings or structures on it also called realty, and improvements there to, also called real property.
In law, the word real means relating to a thing (res/rei, thing, from O.Fr. reel, from L.L. realis "actual," from Latin. res, "matter, thing"), as distinguished from a person. Thus the law broadly distinguishes between "real" property (land and anything affixed to it) and "personal" property (everything else, e.g., clothing, furniture, money).
Our ancestors abandoned the hunter-gatherer lifestyle gradually over the period from 30,000 B.C. to 15,000 B.C. This change was far from global and hunter-gatherer societies still survive in some areas of the world today, but it did mark a transition toward an agrarian society.
A transition that also heralded the advent of home ownership, the birth of home ownership and real estate.
Staking A Claim
Many agrarian systems progressed like this: Fertile plains were staked out and settled in a might-makes-right manner in which those who could defend the land were those who kept it. Eventually, a system of tribal leaders developed, and those who had the approval of the tribe would disperse lands, settle disputes and require a payment from all his subjects.
The shift toward more and more powerful tribal leaders culminated in a pooling of labor resources, to direct efforts. Irrigation channels were dug, strongholds were built, farming methods improved and temples were erected.
With the land improvements, populations also exploded. Now, where a family of hunter-gatherers might be able to support one or two children at best, farmers could produce several children. The increased fertility also meant increased available laborers.
In return for the sacrifice of familiarity, people living in these small societies gained the safety of numbers. A well-fed army easily repelled any desperate raiders. In return for this security, the people all paid homage to the lord or king who claimed ownership of the land - which, in essence was the first system of rent.
As these farming villages grew into cities, the leading families maintained ownership by right of lineage - their ancestors had clubbed all other challengers senseless - thus becoming the kings, pharaohs, daimyos and the heads of other feudal dynasties.
An invaluable glimpse of legal history regulating the most valuable asset of them all: land. In medieval times, land was the sole form of wealth.
Land ownership in feudal times, as with most objects, depended primarily on possession:
There were no courts or police force ready to recognize or enforce "legal rights" as we know them today.
A king and a feudal system is establish.
This system of labor-for-protection developed into two separate systems in most countries: taxes and tenancy. Royal families spread their wealth to friends, signing away titles and deeds to lands that allowed the holders to collect the revenues (rent) produced by the peasants living on the land.
On top of this rent, all the people within a ruler's realm were generally required to pay a tax. Many other demands were made by a king or a ruling Nobleman, such as military service, and they were grudgingly met because these rulers owned the land not only by birthright, but by military might as well.
Rulers could be overthrown by other rulers, and sometimes by peasants, but a new ruler would sit on the throne and the average peasant could rarely notice a difference.
People were eventually able to trade with other kingdoms and the general level of wealth increased, giving rise to a merchant class as well as specialized laborers - the tradesmen, who were able to earn a living with their skills and not by their crops.
This, in turn, resulted in non-agrarian shops and houses that still paid rent and taxes to the various lords and kings, but were bought, sold and rented among the common folk rather than by the royal class.
Richer merchants became the first common-born landlords and gained wealth and status. These merchants did not own the land, but they owned the houses on it.
What happen lands with titles were broken into smaller parcels and sold on a free market of sorts, but the people with the money to buy the deeds were either merchants or former aristocrats who managed to escape from being depose or killed by revolutionary fervor.
Peasants had yet to make much progress from the original farming-tribesmen 30,000 years before them.
The Development and Origins of Modern Real Estate.
The conceptual difference was between immovable property, which would transfer title along with the land, and movable property, which a person would retain title to.
The oldest use of the term "Real Estate" that has been preserved in historical records was in 1666.
The use of "real" to refer to land also reflects the ancient preference for land and the ownership thereof (and the owners thereof). This, in turn reflects the values of the medieval feudal system, which is the ultimate root of the common law.
The word Real is derived from "royal" (The word royal-and its Spanish cognate real-come from the related Latin word rex-regis, meaning king. For hundreds of years the Royal family / King owned the land, and the peasants paid rent or property taxes to be on the Royal's land (Estates). Thus, the term Real Estate.
Today, just like hundreds of years in the past, we pay property taxes to the government, or rent to be on the government's land. However, the "real" in "real property" is derived from the Latin for "thing.
Estates and Ownership Define:
The underlying principle of the system was that nobody owned land but the king. The expressions dominion directum and dominion utile are often used to describe the relative ownership of king and lords; the former as landlord the latter as tenant.
This represents a significant difference between real estate and chattels. Chattels can be owned outright. It can also be contrasted with those countries that have an allodialsystem (absolute ownership of land). Even today, in those countries that have inherited the tenurial system, all land belongs to the Crown; persons only own an estate in the land.
The device used by the king to control and administer his land was that of tenure. Tenure was the key component of the feudal system. The king struck a bargain with a lord for a large chunk of land. The lords that held their tenure directly from the king were called tenants-in-chief or in capite
The most important of the incidents is the concept of "escheat" which allowed the land to revert back to the lord. There were two causes for escheat. The first was the death without heirs of the tenant. The second was the conviction of the tenant of a felony. The loss of ones land, not only for oneself but also for one's heirs, led to a cruel and unusual punishment called peine forte et dure(see The Law's Hall of Horrors). A person pleading guilty to a felony lost his land to the lord. But if he died without a plea, the next of kin remained eligible to claim the property by paying relief as discussed above. The system changed somewhat in 1290, when the Statute Quia Emptoreswas passed to prohibit further subinfeudation and allowing tenants to sell their rights without requiring the prior consent of the lord. From this point on, the number of tenures was frozen except that the king was exempt from the Statute and he could grant additional tenures. Eventually, incidents were prohibited and socage of all kind were eliminated and replaced only by free and common variety. Tenures were of a variety of duration known as "estates": Hope you found it interesting and gain a greater appreciation of how Real Estate began and the origins of the modern term for Real Estate.
Have a happy day, thanks for taking time to read.
Who Owns My Mortgage?
by Ralph Roberts
When trying to contact your lender to work out a payment plan or some other deal, knowing who owns your mortgage can be very helpful. Unfortunately finding out is not as easy as it sounds. You should be able to call the phone number on your last mortgage statement or the number in your payment coupon book and connect directly with your lender.
More often than not, this merely puts you in touch with the servicer - the business that collects and processes your payments. In some cases, the servicer is prohibited from divulging the true identity of your lender. In other cases, the person you're dealing with has no idea who your lender is.
Mortgages are often sliced and diced and repackaged into mortgage backed securities (MBS's) that are sold and traded on Wall Street. Many investors subscribe to an automated system called MERS (Mortgage Electronic Registration System) that keeps track of who owns the mortgage and note as it changes hands among investors, as well as who services it for that investor. MERS can provide another level of anonymity to the process. On many mortgages, the Mortgagee (the party that was granted the mortgage) is listed only as MOM (MERS as Original Mortgagee).
No, that doesn't mean you can call your mom to find out who owns your mortgage note. It means you have to try to look it up in the MERS registry. Customers trying to look up the investor on the MERS registry will not find it. MERS makes the name and contact information of the servicer available, but not the name and contact of the investor. That information is for the servicer or investor to disclose, not MERS.
To add to the confusion, the mortgage meltdown sank many banks and other lending institutions which were taken over by other banks or regulators.
So, what should you do if you're trying to track down your lender? Take the following approach:
1. Call the phone number on your most recent mortgage statement or your payment coupon book. This will put you in touch with the servicer who may also be the lender who owns your mortgage or at least be able to tell you the name of your lender. (Remember, the person may not know or may not be permitted to tell you.)
2. If you have an FHA loan, contact FHA's National Servicing Center to determine who owns your mortgage:
(800) CALL- FHA / (800) 225- 5342
Email hsg-lossmit@hud.gov
Department of Housing and Urban Development National Servicing Center 301 NW 6th Street, Suite 200 Oklahoma City, OK 73102
3. You can try to contact Fannie Mae. If they own the note, they may provide the identity of the investor:
1-800-7FANNIE (1-800-732-6643).
4. If the mortgage is listed as MOM or has a MIN (Mortgage Identification Number) assigned to it, you can search the MERS database by mortgage identification number (MIN), your name and social security number, or the property's address. Dial the toll-free MERS Servicer Identification System at 888-679-6377 (an automated touch-tone system) or search online.
5. If you know the name of the bank or other lending institution that owns your mortgage but have no contact information for them, check out Hope Now .
One of the most important steps to saving your home from foreclosure is to get in touch with your lender immediately. Better yet, hire a qualified attorney with experience in foreclosures and loan modifications to contact your lender on your behalf, so you have legal representation on your side.
I can guarantee that your lender has an attorney reviewing the paperwork. You should have one to watch your back, too.
Published: April 27, 2009
Descriptions of Agency: The Buyer Agency Agreement
There are agents, and then there are agents. Yes, it sounds confusing. That's because the term "agent" is often used in a casual manner, referring to any real estate practitioner.
But agent also refers to someone with whom you've established a formal agency relationship-someone who represents your best interests in a real estate transaction and owes you fiduciary responsibilities. Agency relationships are usually established in writing with buyer agency agreements, and require:
The birth of buyer agency
For many years, real estate was practiced in such a manner that agency relationships were only extended to sellers. Any real estate agent who brought a buyer to the table was actually working as a sub-agent to the seller.
This all began changing in the 1980s, when buyer agency started gaining momentum in residential transactions. Today, agency laws still vary from state to state. But even if you live in a state that recognizes buyer agency, you can't assume that you will automatically receive fiduciary responsibilities from the agent you're working with as a potential homebuyer.
That's why it's vitally important to talk to the agent or broker early in your working relationship about his/her agency status. You may also want to consult your state association of REALTORS® to gain a better understanding about agency laws in your particular state, or contact the agency charged with regulating real estate professionals in your state, often referred to as the state real estate commission.
Details vary from one state to another, and each brokerage has its own contract terms within these broader guidelines. But for purposes of illustration, this table outlines how your status may affect the level of service to which you are entitled:
| Are you a buyer-customer or a buyer-client? Services will vary, depending on your agency status* |
|
| If you are a CUSTOMER (no agency relationship), an agent will: | If you are a CLIENT (agency relationship), your agent will: |
| Maintain loyalty to the seller's need | Pay full attention to your needs |
| Tell the seller all that they know about you | Tell you all that they know about the seller |
| Keep information about the seller confidential | Keep information about you confidential |
| Focus on the seller-client's property | Focus on choices that satisfy your needs |
| Provide just the material facts | Provide material facts as well as professional advice |
| Only provide price information that supports the seller's listing price | Provide price counseling based on comparable properties and their professional insights |
| Protect the seller | Protect and guide you |
| Negotiate on behalf of the seller | Negotiate on your behalf |
| Attempt to solve problems to the seller's advantage and satisfaction | Attempt to solve problems to your advantage and satisfaction |
* This chart is for general illustration purposes only. Agency laws vary by state; and specific terms of individual agency contracts will vary from one agent to another.
You may not know if you're a customer or a client.
Depending on the laws in your state, you may find yourself working with someone who is actually negotiating for the seller, not you the buyer. The best way to be certain your interests are being considered and protected is to sign a buyer agency agreement with a trained buyer's rep, which clearly establishes client-level services and spells out what services you can depend upon.
What about dual agency?
In some cases, it will become necessary for your real estate professional to deviate from the single agency model. For example, a buyer-client may become interested in a house that also happens to be offered for sale by a seller-client of their buyer's rep, or by the same brokerage firm. How can a buyer's rep, in this instance, maintain complete loyalty to their buyer if he or she also owes complete loyalty to the seller?
Obviously, they can't. But, depending on the real estate license laws in your state, and your status with the brokerage firm, the manner in which this situation is handled will vary. To get concrete answers, you should read and discuss the brokerage services disclosure statement, which should reflect your state's agency law. If your agent hasn't supplied a disclosure statement, you should ask for it. It spells out the different categories of agency services they provide and how they address dual agency.
Almost all states require disclosure of dual agency and often require that a buyer's rep (or his or her brokerage firm) only act as a dual agent with the written consent of all parties to the transaction. In such a situation, the brokerage agrees to endeavor to be impartial between both parties and will not represent the interest of either party to the exclusion or detriment of the other party. Neither will they share the confidential information of one party with the other party. This is how brokerage firms and their agents strive to create win-win situations for everyone involved. There are a few states that prohibit dual agency even with disclosure and consent.
Other types of relationships
Some states also allow different types of relationships beyond agency relationships. For example, a transaction broker assumes responsibility to facilitate the transaction, rather than represent one side over the other. Further obligations may also be set forth in a written contract with a client.
Even though the laws concerning agency can vary from one state to another, one thing that is constant throughout the U.S. is the obligation for all REALTORS® to comply with the National Association of REALTORS® Code of Ethics.
Issues to discuss with a buyer's representative
Real estate agency relationships, like all business relationships, can be formed in a number of ways. In order to help talk through your options, here are several questions to ask your buyer's rep:
Selling San Antonio One Home At A Time,One Client At The Time. Building Relationships One Client At A Time, One Referral At A Time.
A Real Estate Company Offering a Varierty Of Full Services To Seller And To Buyers.
We specialize in working with Investors and first time home buyers, in the San Antonio Texas and surrounding communities market area.
A qualified, competent agent will help you navigate the myriad of decisions that arise when buying and selling a home. An agent provides value to the homeowner in many ways:
< Adds experience, expertise and knowledage in all aspects of the sales and buying process, which including marketing, financing, negotiations and staging your home to sell.
< Handles all your showings, open houses and provides cutting edge marketing tools to market your home effectively and to close and fund on time.
< A professional real estate agent has a team of vendor partners and a sphere of influence to fall back on, to answer any question you may have.
< Will always have your best interests in mind to you and your family.
< Will handle and advise you on all prices and contract negotiations, will provide you with all the possible options and opportunities to have best offer possible.
< Your time is very valuable to us, we will allow you to spend your time effeciently and effectively.
River Walk View, San Antonio TX.
Are you thinking or are you ready to make the lagest Investment in home ownership.
Are You Thinking About Buying Your First Home?
Will you keep these critical considerations in mind:
< How long you plan to live in the home.
< How long the home will meet your future needs.
< Your credit and home affordability.
< Where your money for the transaction will come from.
< Your ongoing costs and maintenance of home ownership.
Are you still unsure how or if you should buy a home after making these considerations, you may want to consult with a Loan Officer or a Financial Planner.
To help you assess how a home Investment fits into your overall financial future goals.
Will You Please Contact Us Today.
The relationship between a home buyer or seller and their agent is based on trust, understanding and commitment to shared goals.
We strive to continually improve and to enhance the quality of our sevice, to do this, we strive
to make the Real Estate experience as seamless and enjoyable as possible.
Naturally,
We welcome all your emails with questions and feedback and we appreciate the opportunity to 
assist you with your Real Estate needs.
Building Relationships One Client At A Time, One Referral At A Time.
Use this section to write about your specific areas of expertise. Do you specialize in first time buyers - listing high end homes - etc. Are there specific market area's that you specialize in? The more you write about your area's of expertise the more knowledgeable you'll sound to a potential buyer or seller.
Frank has always provided me with in depth knowledge of his properties, and is excellent at providing quick answers. I could always count on the fact that Frank will respond to all inquires rapidly, and follow up as well to make sure any questions had been answered clearly." February 21, 2008
Top qualities: Personable, Expert, High Integrity
Cory Berendzen
hired frank as a Real Estate Agent in 2005
"Frank, Is a knowleable realtor that knows how to take care of his clients. He knows the value of partnering with other real estate industry professionals to bring education and value to his customers." February 21, 2008
Jayson Smith, Independent Agent, Access Insurance Services
was with another company when working with frank at Realty Executive-North
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2010 ActiveRain Corp. All Rights Reserved
