Scott & Tinsley Myrick, Gulf Coast Real Estate Professionals

Information provided by the Alabama Association of Realtors, posted by Tinsley Myrick of RE/MAX of Orange Beach on March 6, 2009.

What is it?

The Alabama Legislature has enacted a new law (§40-18-86 Code of Alabama) that requires Buyers to withhold 3% of the purchase price or consideration paid for the sale or transfer of real estate by non-resident individuals and 4% for sales by nonresident corporations, partnerships, or unincorporated associations of the State of Alabama. THE ACT APPLIES TO THE SALE OF ALABAMA REAL PROPERTY BY A SELLER WHO IS A NONRESIDENT OF THE STATE OF ALABAMA.

Why is it being withheld?

The money is required to be withheld by the Buyer in order to collect the capital gains tax owed by a nonresident seller to the State of Alabama.

Is this a new Tax?

NO. This is not a new tax but rather a new collection mechanism (§40-18-86 Code of Alabama) approved by the Alabama Legislature, to collect capital gains taxes owed on the sale of real property.

When does it take effect?

The collection mechanism law will go into effect on August 1^st, 2008 on all transfers or sales.

Are real property sales subject to taxes?

Yes, in many cases. All capital gains are subject to taxation; however, there are a number of exemptions to the law including sales involving a primary residence and the current sales price thresholds. (See below)

What are the sales price thresholds?

AUGUST 1, 2008 THROUGH DECEMBER 31, 2008

Sales by nonresidents of $800,000.00 and above are subject to the withholding requirement.

JANUARY 1, 2009 AND THEREAFTER

Sales by nonresidents of $300,000.00 and above will be subject to the withholding requirement.

Who is liable in collection of tax owed?

· Under the law the buyer is liable for the capital gains tax owed by the seller if the tax is NOT withheld and timely remitted to the Department of Revenue after the sale or transfer of the real property.

· The Alabama Department of Revenue has adopted interim guidelines, procedures, and forms for the enforcement of the collection of the capital gains tax on nonresident sales.

· Typically the closing attorneys, agents and title companies will handle the actual collection and remit to the Department of Revenue.

How does this affect sellers?

Nonresident individuals will have 3% of the purchase price or consideration paid withheld unless they execute a Department of Revenue Sellers's Certificate of Exemption, Affidavit of Seller's Residence or Affidavit of Seller's Gain. Forms will be available through the Department of Revenue's website at www.revenue.alabama.gov. (click on What's New)

Nonresident corporations, partnerships, or unincorporated associations of the State of Alabama will be subject to the 4% withholding criteria.

§40-18-86 Code of Alabama states: "Any Seller or transferor who meets all of the following conditions and who provides the buyer or transferee with an affidavit signed under oath swearing or affirming that all of the conditions are met will be deemed a resident for the purposes of this section:

1. The seller or transferor has filed Alabama income tax returns or appropriate extensions have been received for the two income tax years immediately preceding the year of sale.

2. The seller or transferor is in business in Alabama and will continue substantially the same business in Alabama after the sale or the seller or transferor has real property remaining in the state at the time of closing of equal or greater value than the withholding tax liability as measured by the 100 percent property tax assessment of such remaining property.

3. The seller or transferor will report the sale on an Alabama income tax return for the current year and file it by the due date.

4. If the seller or transferor is a corporation or limited partnership, it is registered to do business in Alabama."

Do the seller's ever get this withheld tax back?

When seller's file their tax returns their accounting professionals will determine the course of action.

How does this affect buyers?

Under the law the buyer is liable for the capital gains tax owed by the seller if the tax is NOT withheld and timely remitted to the Department of Revenue after the sale or transfer of the real property.

Are there any exemptions from the withholding law?

Yes. There are a number of exemptions to the law including sales involving primary residences. SEE SELLER CERTIFICATE OF EXEMPTION www.revenue.alabama.gov.

Why is this important?

· Nonresident sellers need to be aware of the exemptions and that a percentage will be withheld. This will obviously affect those who may need to close on another property immediately.

· Buyers need to be made aware that this is their responsibility so they are prepared at closing.

Do other states have these requirements?

YES. Approximately 14 states have similar statues and guidelines.

Who has authority over the guidelines and implementation?

Department of Revenue www.revenue.alabama.gov

Where can I read the entire Law and get further information as it is available?

AAR will continue to provide updates as information becomes available through the Department of Revenue website at www.revenue.alabama.gov.

This notice is provided for informational purposes only as a benefit to members of the Alabama Association of REALTORS®. This information is not given as legal advice. Buyers and Sellers are urged to contact closing attorneys, closing agents and/or title companies.

This article was sent to me by Karen Way of Clear Title in Gulf Shores on March 3, 2009. If you want a smooth closing, close with Karen!

Programs offer help to prevent foreclosure

Sunday, March 01, 2009 By KATHY JUMPER Real Estate Editor

Help is on the way for homeowners facing foreclosure, starting Wednesday.

The $75 billion federal Homeowner Affordability and Stability Plan is aimed at helping families restructure or refinance mortgages to avoid losing their homes. The plan also gives lenders incentives to modify mortgages for struggling homeowners, in turn reducing the foreclosure inventory.

"I'm very hopeful and optimistic that this will work," Sandra Dunaway, director of Consumer Credit Counseling Service of Mobile, said last week. She said her office is seeing 40 to 50 homeowners a month for foreclosure prevention help.

"I'm hoping that consumers will come to us first," Dunaway said. "We don't want them to set themselves up to fail. We will do a budget for them, look at their assets and set up a realistic plan for this particular family right now." Consumer Credit Counseling works directly with lenders to help families through the process, she added.

Consumers can begin applying for the mortgage relief Wednesday, according to the federal plan.

There are two programs that offer help, according Dunaway.

No. 1: Homeowners current with their mortgage but who owe more on the house than its current worth can refinance. The government has provided incentives to lenders - for every dollar lost by reducing the interest rate, the government will pay the lender a dollar. And there is an incentive for homeowners - if the borrower stays in the house, the government will pay $1,000 toward the principal balance each year for up to five years, she said.

No. 2: Those struggling to make their mortgage payments or already delinquent may be eligible for a loan modification, she said. The same incentives are available for lenders and borrowers under this program.

There are no guidelines that dictate a specific reduction in rates or payments, according to Dunaway, who added, "With the rash of foreclosures, I'm thinking that the lenders are going to get on board with this."

Local lenders seemed to agree.

"No bank wants to foreclose," said Glynis Hyde, a vice president at Regions Bank. "We're not in the rental or selling business." Regions a year ago implemented its own mortgage payment hardship program to help customers find different strategies to prevent foreclosure, she said.

Banks don't want the real estate, said Karen Sullivan of BankTrust in Mobile. "That's not what's profitable for us. We try to work with the customer - some payment is better than no payment."

The foreclosure bill is geared for individuals in crisis, not for investors who bought to flip, according to Sullivan. Still, she said there are ways to restructure even those mortgages to help investors.

For more information, go to www.financialstability.gov or www.recovery.gov.

Wednesday, February 25, 2009 By ROY HOFFMAN, VIRGINIA BRIDGES, CONNIE BAGGETT and JILLIAN KRAMER Staff Reporters

As the first drums sounded along the parade route Tuesday morning, and masked riders appeared, the Carnival crowd knew Fat Tuesday 2009 was under way.

Misty Davis, of Chatom, held her purple umbrella fashioned with a purple boa. Snowbirds Rocky and Barbara Rockwell, of Rochester, N.Y., wore funny hats they had purchased in town. Kathy Smith, from Chunchula, rocked granddaughter Rachel, 16 months, in her arms to the beat of the music.

Some were first-timers, like the Rockwells, who had traveled to Mobile just to experience Mardi Gras because "it originated in Mobile." Others, like Kasie Irby and her circle of family and friends, were reliving a yearly ritual, having parked their truck near Bienville Square on Monday night and set up chairs for all-day revelry.

"I want to catch some beads for my Daddy," said Reanna Vlasic, 5, whose mom, Donna Vlasic, had traveled with Reanna and other family from Baker, Fla., for the event.

"We just say it's for the kids," said Reanna's aunt, Jaclyn, laughing.

On the other side of Mobile Bay, at the Gulf Shores and Orange Beach parades, locals, tourists and snowbirds came together in search of revelry, big beads, and chocolate and peanut butter Moon Pies.

Apparently, snowbirds have had little trouble figuring out how to earn Mardi Gras loot. Some stood up front yelling that they were "Mardi Gras virgins," while others stood behind the crowd flaunting their undergarments, worn over their clothes.

And as Mobile's frenzied reveling rose to a crescendo with the sun setting in the west, streets around downtown filled with traffic as latecomers searched for parking in a city already gridlocked with merriment.

Hundreds have apparently adopted the parking theory "they can't tow all of us" as streets jammed with parked cars even as the Order of Myths began the closing act of Mardi Gras 2009.

True to form, there was Folly chasing Death around the broken column of life, and a string of floats following a regal theme for their 142nd annual parade: "Of Kings and Emperors."

Even in the hysteria of flying candy and toys, there was chivalry. A group of teens that had racked up on throws turned to a mother with a small child in a stroller and loaded the youngster up with Moon Pies and trinkets as the grateful woman thanked them.

Parade highlights

Weather: As Deborah DeGuire, owner of A&M Peanut Shop on Dauphin Street said while serving customers in her jam-packed store at noon, "So far, so good. The weather is perfect!" In the morning, shortly before 11, when Athena reached Bienville Square, the temperature on the sign on Regions Bank at the corner read 56 degrees. When the Knights of Revelry were there, about 1 o'clock, it was 63 degrees. Clear, pleasant, blue-skied during the day, the weather seemed made for Fat Tuesday revelry. In the evening, the weather was cool and clear, with a temperature in the middle 50s by the time the floats rolled.

Gulf Shores/Orange Beach - Conditions here were chilly when revelers started to line the parade route Tuesday morning, but many shed their jackets after standing in the warm sun. When the Gulf Shores parade started at 10 a.m., it was about 54 degrees, but by the 1:30 p.m. Orange Beach procession, the temperature had jumped nearly 10 degrees, according to the National Weather Service.

Best float: Athena - The theme of "An Affair to Remember" was beautifully played out in famous couples, real and imagined. The older generation enjoyed the float dedicated to that cowboy couple of yesteryear, Roy Rogers and Dale Evans. The kids, and oldsters, too, thrilled to Mickey and Minnie.

KOR - "Got Milk," as a theme, made for a delectable cavalcade. Tony the Tiger, on the front of "Frosted Flakes," was bold and colorful; Snap, Crackle and Pop were hard to resist on the sides of "Rice Krispies." Also by popular acclaim, Ivan's Edifices had plenty of color and sparkle.

Gulf Shores/Orange Beach - The Gulf Shores emblem float, decorated like a cabana bar that landed in Mardi Gras, set the beach tone for the many fish, pirate and other nautical floats that followed. Orange Beach's first significant float, a Marlin with the banner "Hooked on Orange Beach," also set an impressive tone for that parade.

Best Marching Band: KOR - Jackson-Olin High School from Birmingham came south to show their Mobile counterparts they could blow the house down, and they did. The most stirring sounds came from the bagpipes of the Virginia Military Institute band, as they marched with beautiful precision in advance of the MCA King Felix III parade.

OOM - Selma High, for high-spirited dancing for most of the route.

Gulf Shores/Orange Beach - Gulf Shores High School rocked the streets during both parades.

Best Truck Band: Athena - The Bay Blasters, knocking out "Old Time Rock and Roll."

Gulf Shores/Orange Beach - Adam Holt. Nothing fancy, just good music.

Stingy or Generous: Athena - Fat Tuesday's first mystic society to roll put everybody in a happy mood with their plentiful throws.

KOR - These guys poured out the treats, with a good number of stuffed animals as part of the bounty.

OOM - Throws were generous, with revelers barely able to carry their bountiful booty home without resorting to bags.

Gulf Shores/Orange Beach - Gener ous. Plenty of stuffed animals, beads and other useless stuff for everyone.

Best Throw: Athena - The beautiful, sought-after beads with the OOA emblem on them, of who else but golden Athena.

KOR - Small cereal boxes from the cereal-themed floats seem like a good idea, in fact, an edible and healthy idea, too, at least to those who can only down so many Moon Pies.

OOM - A plush football was highly prized by those along the barricades. The strangest throw was a set of car keys, which could explain at least one of the hundreds of cars abandoned along the streets of Mobile.

Gulf Shores/Orange Beach - A small, pink stuffed shrimp with a Mardi Gras hat. It sounds pretty simple, but it inspired a heck of a celebration scream when Kattie Ksiazek, 27, of Foley caught it.

Best Little-Seen Umbrella Dance: On Government Street, on a stretch of grass near Royal, Heather Covert from Theodore watched her children, nieces and nephews spinning umbrellas and marching back and forth while waiting on parades as her little son, Preston, blasted his toy horn.

Best Tourist Use of Loot After Mar di Gras: One Pennsylvania woman said she wasn't going to bother buying souvenirs; she would just bring everyone beads and stuffed animals.

Most Appropriate Mardi Gras Beach Parade Costume: How could anyone go wrong with the long T-shirt that sports a svelte body in a two-piece bikini for the women and a buff body in a Speedo for the men?

Best Multi-Tasking Mom: Skating with the Mobile Roller Derby women, leading off the Order of Athena parade, was Robin Martin, wearing a vest emblazoned with her game name: "Southern Belle From Hell." After the parade, Martin referred to herself as a "stay-at-home mom," as she and her husband, Chris, watched over their two kids, Madison, 6, and Zephyn, 19 months.