The Senate Finance Committee recently proposed some startling tax reform changes directly affecting real estate and real estate transactions nationwide. If their proposal is enacted, here are some of the changes investment properties would face:1) Section 1031, which allows deferral of taxes owed on like-kind exchanges, would be repealed. For general information on what a 1031 Exchange is, click here.2) The tax incentives for energy-efficient improvements to large apartment buildings will be repealed.3) All real property would be depreciated over 43 years on a straight-line basis. The current depreciation periods (39 years for commercial non-residential property, 27.5 years for residential property, and 15 years for leasehold improvements) would no longer exist.4) Recaptured depreciation would be taxed as ordinary income, instead of at 25% as it is currently taxed.All of this would make real estate investments more expensive for the owner. Let’s see what happens. . .
The Illinois Department of Financial and Professional Regulation (IDFPR) has amended the licensing requirements for real estate appraisers. The following changes went into effect on December 31, 2013: If you are an associate or trainee appraiser, you must: 1) Give the name and address of your supervising appraiser to the IDFPR; and2) Keep a log for each supervising appraiser you work with, detailing the type of property, the type of work you performed, and other details. If you are a supervising appraiser, you must: 1) Directly supervise associate or trainee appraisers for their first 500 hours of experience;2) Have a valid license as either a certified general real estate appraiser or a certified residential real estate appraiser; 3) Give the IDFPR the name of each new associate or trainee appraiser within 10 days after you hire them; 4) Give the IDFPR the name of each associate or trainee appraiser immediately after they leave your employ.
In the mid-2000s, flipping homes was common. Buyer A would buy a home from Seller, and shortly thereafter sell it to Buyer B, making a tidy profit . But when the economy crashed and lenders tightened up their guidelines, flipping became increasingly rare. But in the last year, as the price of real estate has risen, flipping is slowly making a comeback. According to RealtyTrac, nearly 5% of single-family homes sold nationwide last year were flipped within 6 months. In fact, the number of homes flipped in 2013 increased over 15% from 2012, and nearly 115% from 2011. The average gross profit on such flips in 2013 was over $60,000 per sale. While flipping may be slowly increasing nationwide, according to RealtyTrac the Chicago area has not seen a big increase in flipping. The greatest flipping increases have been out east, in Virginia Beach, VA, Jacksonville, FL, and Baltimore, MD.
Last month, the Department of Housing and Urban Development (HUD) issued new guidelines for lender notice to homeowners who are delinquent in the payment of their FHA loans. If you are delinquent, here’s what you can expect within sixty days after you are delinquent: 1) In the second month of your delinquency, you should receive a letter from your lender including specific information about your past due payments, the lender’s contact information (including a toll free number for their loss mitigation department), a toll-free number you can call to get information on housing counseling agencies approved by HUD, and a request for your current financial information. 2) In the second month of your delinquency, you will also receive a brochure, sent to you by your lender but prepared by HUD. The brochure is called: Save Your Home: Tips to Avoid Foreclosure. These requirements kick in on February 10, 2014, and… read more →