With the iPad 2 slated for release sometime in 2011, this could be the year of the tablet computer. For our February Buyer’s Guide, we’d like to hear your thoughts: Which mobile platform will you invest in next, and why?
And if you’ve already made the move to a tablet, tell us about your experience with the hardware and software. Is a tablet a practical real estate tool? To share your thoughts, plans, or experiences with mobile computing solutions, contact writer Mike Antoniak as he prepares this guide. Also, be sure to participate in the polls below.
By Robert Freedman, Senior Editor, REALTOR® Magazine
The law enacted by President Obama last week to extend the tax cuts of President George W. Bush includes a number of provisions of importance to real estate, but it also leaves out at least one provision NAR opposes. In short, it’s largely a continuation of the status quo for the near future. The one potential drawback is in its cost.
President Obama signs tax extension bill. White House photo
Since it’s not paid for with any program cuts, it stands to put upward pressure on interest rates in the future and could lead to more pressure on lawmakers to find ways to cut the federal deficit, which in turn could make tempting targets out of the mortgage interest deduction and other programs through which the federal government has historically shown its support of home ownership.
On the plus side, the law leaves out a proposal that’s been talked about for close to two years now, and that’s to tax as ordinary income rather than as capital gains the carried interest of general partners in investment partnerships. That proposal, which is targeted at hedge fund managers, would hurt real estate investment partnerships disproportionately, because the vast majority of investment partnerships are for real estate, and NAR has opposed it. So, that issue is neutralized for now.
In general, the law keeps in place existing tax brackets (which go from 10 percent on the low side to 35 percent on the high side) and the existing capital gains rate, which will remain at 15 percent. Depreciation recapture tax rates remain at 25 percent. No new limitations are created for Section 1031 like-kind exchanges. And the existing 15-year cost recovery period for leasehold improvements is retained. Same with existing bonus depreciation treatment: assets with a cost recovery period of 20 years or less are eligible for 100 percent depreciation in the year the assets are placed in service. This rule applies to all assets placed in service on or after Sept. 8, 2010, and before January 1, 2012. Eligible assets placed in service during 2010 will qualify for a 50 percent bonus depreciation allowance.
You can get more details on these provisions in an initial analysis by NAR Government Affairs on REALTOR.org.
Other provisions of note: Continue reading »
By Robert Freedman, Senior Editor, REALTOR® Magazine
The Federal Communications Commission yesterday issued rules to require all Internet content to be treated the same by the companies that control the flow of Internet data into homes and offices. NAR supports this so-called net neutrality issue to help ensure real estate brokers and others in real estate that make heavy use of the Internet won’t face disruption or changes in their services by Internet service providers (ISPs).
Under the rules, which have been some five years in the making, the ISPs (mainly cable and telephone companies such as Verizon and Comcast) are prohibited from blocking lawful content, applications, services, and the connection of non-harmful devices to the network. The ISPs must also create a level playing field for all providers of content on the Internet. That is to say, they can’t treat the flow of content of one Web site different from the flow of content of another Web site.
That’s not to say ISPs can’t change different rates to consumers based on the amount of bandwidth they consume. They can. If a consumer ties up a lot of bandwidth by, say, downloading a lot of video, the ISPs can charge that person more, because bandwidth is a finite resource. But the ISPs can’t discriminate against content providers (that is, Web sites) based on their type of content. If the ISP has one policy for Web sites that make video available on their site, they have to maintain that policy for other sites that make video available. The user experience must be the same. Continue reading »
By Robert Freedman, Senior Editor, REALTOR® Magazine
President Obama’s deficit reduction commission flamed out, right? It needed to get 14 of its 18 members on board for the commission’s final report to go to Congress for an automatic vote on its recommendations, which include curbing the mortgage interest deduction. But the commission only received 11 votes, so we’re back to square one, right?
Actually, we’re not back to square one. Although the report doesn’t automatically go to Congress for a vote, the individual recommendations in the report are alive and well and could yet be voted on by Congress. That’s because there’s nothing stopping President Obama from taking the pieces of the report that he likes and including them in the proposed budget he sends to Congress in January.
Will changes to MID be part of the mix? They could be. The President took a swing at MID last year, when he proposed some curbs for the wealthiest households. Those curbs failed, but the effort shows that the President isn’t hesitant about taking on MID. Continue reading »
By Brian Summerfield, Online Editor, REALTOR® Magazine
There are plenty of reasons why you should be on HouseLogic’s REALTOR® Content Resource (RCR): staying up on home ownership news, gaining insight into design trends, and getting tips that you can pass along to past, present, and future clients.
Here’s another: The site is currently offering the REALTOR® Build-Your-Business Sweepstakes, which includes weekly prizes of $150 Visa gift cards, as well as an iPad for one lucky winner per month. All members have to do is log into the site to enter.
Lucy Edelstein-Perez, a practitioner with Call Realty in Palos Verdes Estates, Calif., was one of those lucky winners. She found out about RCR through the California Association of REALTORS® Web site. Edelstein-Perez says she has used the site to get knowledge of important home and design trends, along with personal marketing ideas.
She also really, really likes her iPad.
“It’s convenient — you can see all the properties easily,” she reports. “Most of the shops [in Palos Verdes Estates] have wifi, so i am now able to meet with more clients and be mobile. It’s much faster than my home computer, giving me more productive time on the ‘Net … I love it all the way around!”
Ross Hardy, an associate with RE/MAX Marketing Specialists in Spring Hill, Fla., has also benefitted from RCR. After seeing an ad for the site in Florida REALTOR® magazine, Hardy checked out RCR and has since incorporated some of the articles he found there in his e-mail campaigns. Oh, and he was able to buy a video camera to shoot home tours with the $150 he won in the Sweepstakes.
So be sure to log into RCR often between now and April. You just might win something — and learn something.
By Robert Freedman, Senior Editor, REALTOR® Magazine
So, there’s no final report coming out of President Obama’s deficit reduction commission, but as many commentators have said, the commission has changed the deficit debate by providing a concrete path for cutting $4 trillion from the deficit over the next several years. What’s more, any number of recommendations in the report could still end up in legislation before Congress. We can expect the President to incorporate some of the suggestions into the budget request he sends to Congress in January.
Linda Chavez, chair, Center for Equal Opportunity. Photo: Creative Commons
Would changes to the mortgage interest deduction be among them? They could be. The President sought a small curb to MID for higher-wealth households in his budget request last year. The proposal didn’t get far, but it shows that his administration is willing to take on MID.
What did the bi-partisan commission propose for MID last week in its now-stalled report? Among other things, it proposed changing the deduction to a credit (a 12 percent credit, in its model) and capping the benefit at $500,000, down from $1 million. It also proposed eliminating the benefit for interest on second homes and home equity loans.
One of the problems with the proposal is that it hurts younger households the most, because newer home owners are the ones that pay by far the most mortgage interest (on a percentage basis) and that in turn rely on the deduction to soften that blow. As Linda Chavez, the chair of the Center for Equal Opportunity, says in a well-reasoned piece just released, “most of the payments in early years go to pay interest on the loan, with only a tiny fraction going to principal.” (NAR has its own analysis of this point.)
Chavez uses an example of a household that’s paying a monthly mortgage payment of $3,000. Of that amount, $2,300, or well over two thirds, goes to interest. To cut into that would not only create a huge burden for the household, but it would have implications for all households, including those who’ve been owners for a long time and now pay a much smaller percentage of their monthly payment to interest.
How so? By causing home values in all price brackets to fall, because home prices today reflect the present-value stream of MID’s tax benefits. Remove that benefit, and home prices will plunge to reflect the loss of that present-value stream. Chavez, citing an analysis by Carlos Bonilla of American Action Forum, uses as an example of a $625,000 house. Of that value, about $72,000 stems from the capitalized worth of MID. Remove that value, and the price drops to $553,000, a loss of about 12 percent. That’s close to an NAR analysis estimating home values to drop 15 percent across the board if MID is cut. Continue reading »
By Robert Freedman, Senior Editor, REALTOR® Magazine
Just as commercial real estate is clawing its way back to slightly better conditions than what it’s faced in the last couple of years, two accounting boards are thinking about making some rule changes that could deal a signifcant blow to companies that lease space and to those that own the property.
The two boards are the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). The rule changes have to do with how lease contracts are treated for accounting purposes. Right now, lease contracts are treated as operating expenses of the companies leasing the space. Under the change, the companies would have to show the full value of these contracts on their balance sheets as a liability.
Why does this matter? Imagine you’re a company with a lease contract worth, say, $250,000. That includes the rent you’re paying on a square-footage basis, the number of months in your contract, and any contingent rents or other factors you add in. Suddenly, you have to show this $250,000 on your balance sheet as a liability. If you’re not a very big company, that $250,000 can throw your balance sheet way out of alignment, making it hard for you to get financing. It could even put you in technical default on your existing line of credit, if you have one. It might be that the terms of your line of credit require you to maintain a certain asset-to-liability ratio. Well, suddenly you no longer meet that ratio.
Recent Comments