March 3 , 2009
Dear Real Estate Professional:
Federal Stimulus Plan. The American Recovery and Reinvestment Act has a few provisions of particular interest to the target audience of this newsletter:
Individuals:
- Refundable First Time Homebuyer Credit. For houses purchased after 1/1/09, taxpayer gets a credit of 10% of the home (not to exceed $8,000). If house is sold within 3 years, the credit would have to be repaid to government. Credit phases out if income exceeds $75,000 ($150,000 joint-filers). For purchases before 1/1/09 there is a different repayment requirement.
- No AMT for single filers whose income is under $46,700 ($70,950 joint-filers).
- Deduction for sales tax on new car purchases (phases out at higher income levels)
- Computers are includable in Section 529 education plans. Up to $2500 year can be deducted for college expenses (phases out at higher income levels)
- Small business capital gains: 75% (up from 50%) exclusion on gain from sale of certain small business stock held for more than 5 years (stock must have been issued between enactment date of the law and Jan 1, 2011)
- Small Business Expensing: can write off up to $125,000/year for certain capital expenses (subject to a phase out once the total expenses exceed $800,000 over the years).
- Net Operating Loss Carryback: NOL's can be carried back 5 years (up from 2 years)
- Tax Credits for Energy-Efficient Improvements to Existing Homes. The bill would extend the tax credits for improvements to energy-efficient existing homes through 2010. Under current law, individuals are allowed a tax credit equal to ten percent (10%) of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during the taxable year. There are caps on certain types of installations as well as elimination of property-by-property dollar caps on this tax credit and provide an aggregate $1,500 cap on all property qualifying for the credit.
More in-depth summary available: here and a good article in the Washington Business Journal can be found here.
Federal - Homeownership Affordability and Stability Plan: President Obama has proposed $75B for homeowners who have lost equity in their properties, but are otherwise current on their mortgage payments AND for delinquent homeowners who need a loan modification. More information available: executive summary; Wall Street Journal article on cram-downs and effects on lenders.
Attention Title Companies and Fiduciaries: FDIC can cover some accounts 100% (beyond $250,000)!: As reported in our last newsletter, as long as your bank participates in the FDIC's Transaction Account Guarantee Program, through December 31, 2009 all noninterest-bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account. Coverage under the Transaction Account Guarantee Program is in addition to and separate from the coverage available under the FDIC's general deposit insurance rules. The catch is that the account has to be a zero-interest bearing account (that includes IOLTA and accounts that earn less than .5%). Sweep accounts and similar would not have the same unlimited protection. Consult with your bank to determine if the bank is participating or has opted out. Make sure your account qualifies for the unlimited coverage. Above all, if your account is an escrow account or similar, make sure the account is properly titled as such to ensure that each person for whom you hold money has separate coverage. If you fail to do that, there could be dire consequences. For an excerpt from the federal regulations, Click Here for Excerpt; For full FAQ from FDIC, Click Here for Full FAQ.
Federal and DC: Pay attention to COBRA requirements and recent changes: Employees of groups with more than 20 employees are entitled to 18 months of COBRA coverage under federal law. Part time employees are counted pro-rata to arrive at the 20-employee threshhold. The District of Columbia has a mini-COBRA law that requires small employers (2-20) to offer COBRA coverage to their departing employees for a period of 3 months, unless they were terminated due to gross misconduct. The ex-employee will be responsible for paying the premium, plus a possible 2% surcharge. For persons that have exhausted their COBRA option, some insurance companies may offer a conversion policy, but these are not mandatory for all types of group health plans in the District of Columbia. Guaranteed issue coverage is also made available through private health insurance companies offering an individual health plan in DC. For any person that has had 18 months of continuous coverage, most recently under a group health plan, the insurance companies must offer at least two of their health plan choices without medical underwriting. Recent changes to COBRA that require employers' immediate attention are discussed in Jackson and Campbell P.C's recent Employment Law Alert. Click here.
DC: Changes proposed to Lis Pendens to include leasehold interests: The DC Bar's Real Estate, Housing, and Land Use Section advises that Bill 18-91 was introduced on behalf of the Mayor on January 22, 2009 and is pending before the DC Council. While the Bill addresses how to release improperly filed Notices of Lis Pendens, it also makes a radical proposal to extend the Lis Pendens provisions to include leasehold interests. To see the Bill, click HERE.
DC: More than $4,000,000 taken from Recorder of Deeds Surplus Fund: Over the past years, a $6.50 surcharge on deeds has been collected and set aside in a separate fund to facilitate the automization of the Recorder of Deeds. In the most recent Budget Support Act, that pot was raided of $4,000,000 which was transferred to the general fund, after the Council heard testimony that the money could be reassigned without consequence. The DC Land Title Association is meeting with OTR this coming week to discuss what steps can be taken to have some of this money restored and used for its original objective. There will also be discussion of the oversight of the automation and computerization systems at ROD.
DC: Councilman Evans Proposes Tax Cuts to Businesses: See Washington Business Journal article here.
DC: Home Values in Broad Decline, with few exceptions across the entire District: As reported by the Washington Post. Click here.
Mortgage Bankers Association reports an increase in refinance applications of 45% over last week and 5% over the same week last year. Refinance loans represent 74% of all loan applications (up from 66% last week) and ARM's represent only 1.7% of the applications. Average 30-year fixed rates were down to 4.99% at 1.37 points. On a more somber note, Commercial and multifamily mortgage loan originations dropped during 2008 4Quarter more than 80% over the same quarter in 2007.
DC Department of Housing and Community Development:
- Kudos to DHCD's Housing Regulation Division in their efforts to include stakeholders in roundtable discussions about Rent Administrator, HRA Administrator, Hardship Petitions, Rental Unit Registration.
- Next meeting focuses on Housing Provider Stakeholders and is on March 5, 10am, 441 4th St NW, Room 1117. To RSVP: Vivian.protis@dc.gov or 202-442-7275.
- A Meeting for Tenant Stakeholders: March 3 @ 10am (441 4th St NW) and June 2 @ 10am (1800 MLK Ave SE).
- The Rental Conversion and Sale Division and the Housing Regulation Divisions have moved to their new space at 1800 MLK, Jr. Ave SE, Washington, DC 20020. The divisions are in need of money to fund inspectors and engineers for the warrant bond enforcement actions and interested persons should contact their respective councilpersons to indicate their support for this funding.
DC Impervious Surface Area Charge - WASA: Pending in DC is Proposed Rulemaking for DC WASA that would permit additional taxation on commercial properties based upon how much land has been covered by concrete or structures. Comments are due by March 26, 2009. For a Powerpoint presentation by WASA on this topic, Click here. To see the notice of the proposed rulemaking, Click here.
DC Tax Assessment Notices and Bills Have Been Mailed: Taxes are due on March 31. Take a moment to review your bill to see if you are receiving the Homestead Exemption available to those domiciled in DC and the property is the principal place of residence. If you are erroneously receiving the Exemption, you should notify OTR or face penalties and back-assessments when your Exemption form is compared to a tax return. To apply or terminate an exemption to the OTR website and complete and return the appropriate form per the instructions. If you wish to appeal your 2010 assessment, your Appeal Application must be filed by April 1, 2009. See below for DC Bar seminar covering tax assessment appeals.
MD: Montgomery County: Taxation of Deeds from HUD, Fannie Mae, and similar entities. For details: Click here.
DC: Jackson & Campbell, P.C. makes available a Chart of Pending D.C. Legislation.
Upcoming Seminars of Interest to the Real Estate Community:
Title Law in Virginia. National Business Institute ("NBI") seminar set for March 9, 2009 in Fairfax, VA. Presenters include Russell S. Drazin, Esq., Jason A. Pardo, Esq. and Allyson C. Kitchel, Esq. of Jackson & Campbell, P.C. Click here to register or for more information.
Sections Dinner Highlights Real Estate Developments. Real Estate, Housing and Land Use Section of the DC Bar. March 10, 2009 at 6:30 to 9 p.m. Section Chair Roy L. Kaufmann of Jackson & Campbell, P.C. will discuss developments in legislation relating to real estate. For more information or to register, go to www.dcbar.org and click on "For Lawyers", Events to register. Registration is open to people who are not members of the Bar
Assessment Appeals in the District of Columbia. DC Bar. March 12, 2009 at 12:00 - 2:00 p.m. www.dcbar.org and go to "For Lawyers", Events to register. Registration is open to people who are not members of the Bar.
Effective Writing for Lawyers Workshop. DC Bar. March 24, 2009 at 9:30 a.m. - 4:30 p.m. www.dcbar.org and go to "For Lawyers", Events to register. Registration is open to people who are not members of the Bar.
Advanced Effective Writing for Lawyers. DC Bar. March 27, 2009 at 9:30 a.m. - 1:45 p.m. www.dcbar.org and go to "For Lawyers", Events to register. Registration is open to people who are not members of the Bar.
Mortgage Fraud Litigation. DC Bar. March 31, 2009 at 12:00 - 2:00 p.m. Presenters include David H. Cox, Esq. of Jackson & Campbell, P.C. www.dcbar.org and go to "For Lawyers", Events to register. Registration is open to people who are not members of the Bar.
Mediating Real Property and Landlord/Tenant Disputes. DC Bar. April 1, 2009 at 12:00 - 1:30 p.m. www.dcbar.org and go to "For Lawyers", Events to register. Registration is open to people who are not members of the Bar.
Title Law in Washington, D.C.. National Business Institute ("NBI") seminar set for April 27, 2009 in Washington, DC. Presenters include Clifton M. Mount, Esq. of Jackson & Campbell, P.C. Click here to register or for more information.
Please feel free to circulate this newsletter to others in the industry, both within and outside your office.
Sincerely,
Roy L. Kaufmann of the Real Property and Asset Management Group
Jackson & Campbell P.C.
email: Roy L. Kaufmann at rkaufmann@jackscamp.com
voice: (202) 457-1600
web: www.JacksCamp.com
The contents of this Update are intended for general informational purposes only and should not be relied upon as legal advice or as a substitute for consultation with a qualified attorney. Moreover, the mailing hereof is not intended to create nor does it constitute an attorney-client relationship.
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