Legislatively Speaking By Claudette Bruck

Legislatively Speaking By Claudette Bruck

claudette bruckI hope you find the following update of interest and of service.

Current tax law permits an investor in real estate to defer capital gains taxes on exchanging an investment property for another property of like kind that is also held for investment, so long as the taxpayer satisfies numerous requirements and consummates a purchase of replacement property within 180 days of the transfer of the relinquished property.

At the January meetings, FR approved:

  • support of changing the required minimum course length from 3 to 2 hours, as long as the overall 30 hours of CE requirement remains, for appraisers.
  • legislation promoting equal protection by prohibiting sexual orientation and gender identity in state law
  • support of legislation to establish a durable private primary flood insurance marketplace, including the creation of a publicly available database of elevation certificates.
  • continued efforts to phase out the sales tax on commercial leases

Federal issues update:

  • FLOOD INSURANCE: An Executive Order was issued requiring that construction funded by the federal government meet a new level of resilience to withstand the impact of flooding, improve the resilience of communities and protect federal investments.  NAR is concerned that the new standard could impact communities and homeowners by increasing rates for properties in the floodplain.  Public comment will be sought once a draft of the implementation process is available.
  • TERRORISM INSURANCE: In January this year, the federal Terrorism Risk Insurance Act (TRIA) renewed through 2020; mandating that insurers provide terrorism insurance along with their property and casualty coverage.  Since lenders require such insurance, there was great concern that construction/development around the country would be held up without it.  This is certainly a win for commercial Realtors and investors.
  • MORTGAGE FORGIVENESS DEBT RELIEF: Those who completed short sales in 2014 are protected by the extension of the Mortgage Forgiveness Debt Relief Act.   Without the protection provided by this Act, forgiveness of debt on a short sale was viewed by IRS as a taxable event.  The bad news is that there is currently no protection for those involved in a short-sale this year, and, it does not appear the Act will be extended again, unless supporters make an all-out effort to provide debt relief as a permanent part of the tax code.  Be ready to respond to calls to action regarding this issue.
  • FORECLOSURES: While the market is showing clear signs of improvement, Florida still leads the nation in vacant foreclosure homes.  A surprising number of people leave their homes prior to foreclosure proceedings being filed.
  • FIRTPA: Current law provides an exemption to small foreign portfolio investors owning 5 percent or less of a publicly traded REIT.  Legislation is under consideration to increase that exemption from 5 to 10 percent, which many think may bring billions of dollars into the U.S from outside.  Keep your eyes on the House and Senate to see if this Bill is advanced.
  • RESPA: Changes to the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) established by the Consumer Financial Protection Bureau provides for the good faith estimate to be combined with the truth in lending disclosure and the HUD-1; and requires that the closing disclosure be delivered to the consumer three days prior to closing.  Marketing agreements are being scrutinized as well as anything of value being received for the referral of settlement services in residential transactions involving a mortgage.

 

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