By The Burton Law Firm
This article is for informational purposes only. Nothing in this article should be understood as legal advice, and no attorney-client relationship is created by it or the information it contains. Consult with a licensed attorney if you require assistance in a legal matter. This article is protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of The Burton Law Firm. You may not alter or remove any trademark, copyright or other notice from copies of the content.
The tenancy in common (TIC) can be a very useful form of co-ownership. Tenancies in common are the “default” form of joint property ownership in California, so if the title documents do not specify a different form of joint ownership, it is generally presumed that a tenancy in common exists. However, a person who owns land outright may create a TIC in order to pass the property to another person for estate planning purposes.
Features of Tenancies in Common
A tenancy in common is one way of taking title to real property. In a TIC, multiple owners each hold title to an undivided interest in the whole property. Each owner has a right to use and enjoy the entire property. So if one owner holds 1% of the entire title, that owner may utilize the entire property for his business. However, that owner may not destroy or ruin the value of the land or its utility for other co-owners. If he or she does so, that owner may be liable to the other co-owners. Tenants in common do not have a right of survivorship with one another. Thus, if one co-tenant dies, the deceased co-tenant’s interest passes by testamentary instrument or operation of law to the co-tenant’s beneficiaries or heirs. The other co-tenants do not automatically acquire the interest, as would occur in a joint tenancy with right of survivorship.
TICs in Estate Planning
TICs can be used as an estate planning device. In this context, TICs let a donor transfer a low-value interest in high-value property to another person during the donor’s lifetime. With careful planning, this can reduce the donor’s taxable estate at death while minimizing gift tax consequences during life.
The TIC works in the following manner. The donor already owns a piece of property and wants to pass it on, usually to a family member. The donor would give a tenancy in common interest to a new owner (the donee). A tenancy in common interest is not as valuable as a fee simple interest in the entire property due to the reduced marketability of the interest, the limited freedom of use of the property, and potential limitations on transferring the interest to a third party. By creating a tenancy in common interest valued under the annual gift tax exclusion amount, the donor may transfer the TIC interest without incurring gift taxes. And since the value of the gift is lower than the value of the piece of property actually transferred, the donor is removing a large portion. Therefore, the donor transfers a low-value interest in a high-value property.
For a rough example, assume that D wants to transfer a TIC interest in real property to D’s grandchildren. The property is worth $250,000. D creates ten TIC interests, one for each grandchild, and ensures that each interest has a discounted value equal to the annual gift tax exclusion amount ($12,000 in 2007). D gives all ten interests to the grandchildren, which totals $120,000 in gifts. But due to the devaluation of TIC interests, the ten TIC interests actually dispose of a much higher value of property, perhaps around $180,000. Therefore, D has reduced his taxable estate by $180,000 while only making $120,000 in gifts and not incurring any gift tax. Using the TIC has allowed the donor to pass on property which has been assigned a greatly discounted value.
There are some disadvantages to using a TIC, however. First, the donor gives up control over the portion of the property transferred as a TIC interest. If the donor desires the interest back, he or she must purchase it from the donee. Second, once the donee receives his or her interest, the donee is free to treat the property as the donee sees fit. The donee could use the property for a purpose not intended or even contemplated by the donor. Third, the donee is free to transfer the TIC interest to a third party. This could prove a rude surprise for the donor, who no longer is dealing with a trusted donee, and instead must now deal with a complete stranger. Fourth, the donee could sue for partition of the property and a court could order that the property be either physically separated, with each co-tenant receiving his or her share and dissolving the tenancy, or that the property be sold and the proceeds divided according to the respective interests of the co-tenants. Finally, the donor may recognize taxable gain on the value of the property transferred to the donee, and thus gift taxes may be owed. However, by utilizing the annual gift tax exclusion amount, this need not be of great concern to the donor.
Conclusion
You should speak with an attorney before creating a tenancy in common to serve your tax or estate planning legal needs. Although a TIC might be right for your situation, other legal options will often provide greater flexibility for you and your family while still meeting your planning objectives.
For a more in depth review of this subject, please see: www.lawburton.com, news/resources.
The Burton Law Firm
555 University Avenue, Suite #275
Sacramento, CA 95825
Phone: (916) 570-2740 Fax: (916) 570-2744
www.lawburton.com
info@lawburton.com
Sunday, May 18, 2008
Disability Guidelines - Part 2 (Who must comply and who does and does not qualify as disabled)
In our last article we began discussion of the May 17, 2007 Department of Justice disability guidelines. The new guidelines state that “Any person or entity engaging in prohibited conduct – i.e., refusing to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford a person with a disability an equal opportunity to use and enjoy a dwelling – may be held liable unless they fall within an exception to the Act’s coverage. Courts have applied the Act to individuals, corporations, associations and others involved in the provision of housing and residential lending, including property owners, housing managers, homeowners and condominium associations and others involved in the provision of housing and residential lending, including property owners, housing managers, homeowners and condominium associations, lenders, real estate agents, and brokerage services. Courts have also applied the Act to state and local governments.
Under specific exceptions to the Fair Housing Act, the reasonable accommodation requirements of the Act do not apply to a private individual owner who sells his own home so long as he (1) does not own more than three single-family homes; (2) does not use a real estate agent and does not employ any discriminatory advertising or notices; (3) has not engaged in a similar sale of a home within a 24-month period; and (4) is not in the business of selling or renting dwellings. The reasonable accommodation requirements of the Fair Housing Act also do not apply to owner-occupied buildings that have four or fewer dwelling units.”
Who qualifies as a “person with disability”
In the new guidelines it states that “The Act defines a person with a disability to include (1) individuals with a physical or mental impairment that substantially limits one or more major life activities; (2) individuals who are regarded as having such an impairment; and (3) individuals with a record of such an impairment.
The term ‘physical impairment’ includes, but is not limited to, such diseases and conditions as orthopedic, visual, speech and hearing impairments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, Human Immunodeficiency Virus infection, mental retardation, emotional illness, drug addiction (other than addiction caused by current, illegal use of a controlled substance) and alcoholism.
The term ‘substantially limits’ suggests that the limitation is ‘significant’ or ‘to large decree.’
The term ‘major life activity’ means those activities that are of central importance to daily life, such as seeing, hearing, walking, breathing, performing manual tasks, caring for one’s self, learning and speaking. This list of major life activities is not exhaustive.”
Who does not qualify
The Act states that “juvenile offenders, sex offenders, by virtue of their status, are not persons with disabilities protected by the Act. Similarly, while the Act does protect persons who are recovering from substance abuse, it does not protect persons who are currently engaging in the current illegal use of controlled substances. Additionally, the Act does not protect an individual with a disability whose tenancy would constitute a ‘direct threat’ to the health or safety of other individuals or result in substantial physical damage to the property of others unless the threat can be eliminated or significantly reduced by reasonable accommodation.
The Act does not allow for exclusion of individuals based upon fear, speculation, or stereotype about a particular disability or persons with disabilities in general. A determination that an individual poses a direct threat must rely on an individualized assessment that is based on reliable objective evidence (e.g. current conduct, or a recent history of overt acts). The assessment must consider (1) the nature, duration, and severity of the risk of injury; (2) the probability that injury will actually occur; and (3) whether there are any reasonable accommodations that will eliminate the direct threat. Consequently, in evaluating a recent history of overt acts, a provider must take into account whether the individual has received intervening treatment of medication that has eliminated the direct threat (i.e. significant risk of substantial harm). In such a situation, the provider may request that the individual document how the circumstances have changed so that he no longer poses a direct threat. A provider may also obtain satisfactory assurances that the individual will not pose a direct threat during the tenancy. The housing provider must have reliable, objective evidence that a person with a disability poses a direct threat before excluding him from housing on that basis.”
Gary Link, Attorney, is President of the Law Office of Gary L. Link, Inc. Since 1979, Mr. Link has represented landlords in over 35,000 eviction cases and litigated over 10,000 eviction trials. He is a member of the California Apartment Association, the Rental Housing Association, as well as a member of the local, state, and national bar associations.
For questions relating to this article, call the law office at 916-447-8101. The information in this article is applicable as of 2007.
Under specific exceptions to the Fair Housing Act, the reasonable accommodation requirements of the Act do not apply to a private individual owner who sells his own home so long as he (1) does not own more than three single-family homes; (2) does not use a real estate agent and does not employ any discriminatory advertising or notices; (3) has not engaged in a similar sale of a home within a 24-month period; and (4) is not in the business of selling or renting dwellings. The reasonable accommodation requirements of the Fair Housing Act also do not apply to owner-occupied buildings that have four or fewer dwelling units.”
Who qualifies as a “person with disability”
In the new guidelines it states that “The Act defines a person with a disability to include (1) individuals with a physical or mental impairment that substantially limits one or more major life activities; (2) individuals who are regarded as having such an impairment; and (3) individuals with a record of such an impairment.
The term ‘physical impairment’ includes, but is not limited to, such diseases and conditions as orthopedic, visual, speech and hearing impairments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, Human Immunodeficiency Virus infection, mental retardation, emotional illness, drug addiction (other than addiction caused by current, illegal use of a controlled substance) and alcoholism.
The term ‘substantially limits’ suggests that the limitation is ‘significant’ or ‘to large decree.’
The term ‘major life activity’ means those activities that are of central importance to daily life, such as seeing, hearing, walking, breathing, performing manual tasks, caring for one’s self, learning and speaking. This list of major life activities is not exhaustive.”
Who does not qualify
The Act states that “juvenile offenders, sex offenders, by virtue of their status, are not persons with disabilities protected by the Act. Similarly, while the Act does protect persons who are recovering from substance abuse, it does not protect persons who are currently engaging in the current illegal use of controlled substances. Additionally, the Act does not protect an individual with a disability whose tenancy would constitute a ‘direct threat’ to the health or safety of other individuals or result in substantial physical damage to the property of others unless the threat can be eliminated or significantly reduced by reasonable accommodation.
The Act does not allow for exclusion of individuals based upon fear, speculation, or stereotype about a particular disability or persons with disabilities in general. A determination that an individual poses a direct threat must rely on an individualized assessment that is based on reliable objective evidence (e.g. current conduct, or a recent history of overt acts). The assessment must consider (1) the nature, duration, and severity of the risk of injury; (2) the probability that injury will actually occur; and (3) whether there are any reasonable accommodations that will eliminate the direct threat. Consequently, in evaluating a recent history of overt acts, a provider must take into account whether the individual has received intervening treatment of medication that has eliminated the direct threat (i.e. significant risk of substantial harm). In such a situation, the provider may request that the individual document how the circumstances have changed so that he no longer poses a direct threat. A provider may also obtain satisfactory assurances that the individual will not pose a direct threat during the tenancy. The housing provider must have reliable, objective evidence that a person with a disability poses a direct threat before excluding him from housing on that basis.”
Gary Link, Attorney, is President of the Law Office of Gary L. Link, Inc. Since 1979, Mr. Link has represented landlords in over 35,000 eviction cases and litigated over 10,000 eviction trials. He is a member of the California Apartment Association, the Rental Housing Association, as well as a member of the local, state, and national bar associations.
For questions relating to this article, call the law office at 916-447-8101. The information in this article is applicable as of 2007.
Diamonds in the Rough
Conditions favorable for income property purchase
Current conditions in the real estate market are resulting in favorable circumstances for those looking to buy income property. As more subprime loans reset in 2008, anticipate another wave of short sales and foreclosures to appear, and with the Feds announcing that their priority is the economy, expect interest rates to stay relatively low.
Low interest rates and almost bottom-out prices are creating new investment opportunities and a healthy correction for the real estate industry. Investors have no trouble finding bread and butter properties that create cash-flow with a down payment of 20% or less. The only problem is that the best of these properties under $250k go pending very quickly, and investors are competing with multiple offers that are often above asking price and sometimes involve all cash.
As homeowners lose their homes, how is the rental market affected? We all require the basic necessities of life, and one of them is shelter. With the rise of foreclosures, the transition from homeowner to renter has become more common, and it’s been difficult not only on FICO scores, but on many egos. Most homeowners refuse to move out of their 2500 sq ft home into an apartment or condo, preferring to rent a house, and even then, most will not even consider anything under 1300 sq ft. These new renters are willing to pay a premium for a house that is clean and shows well.
FICO: More than a number
Screening Tenants
There may be some concern, as a landlord, that if potential renters defaulted on their mortgage, they will default on their rent. The truth of the situation is, the majority of transitioning homeowners were doing just fine paying their mortgage until their loan reset. Their new monthly payments almost doubled, while their income remained unchanged; one can easily see how their new mortgage payments became an issue for them.
So how do you screen these tenants? Rather than focusing on the FICO score, look at their other trade lines, such as car loans, credit cards, etc. If the majority of their trades are in good standing with zero to very few 30, 60 and 90 day late payments, and/or they have only a foreclosure, you may be screening a sound prospective tenant who has a history of paying on time. On the other hand, unfortunately those who have tried to survive through a foreclosure nightmare by sacrificing their trades in good standing have made it almost impossible to qualify for a rental. So, if you decide to consider an applicant who has foreclosed, don’t neglect to verify your other objective rental standards. Although many have made a huge financial mistake that has cost them homeownership, we have found that many ex-homeowners still take pride in their homes.
Optimistic Outlook
With a struggling economy and record-setting foreclosures, many paint a picture of bleak times. For those with a more optimistic viewpoint, looking to purchase a new income property or fill a vacant one, there are many “diamonds” waiting to be found. The current real estate market, as with the rest of the economy, will undergo changes, but for those with an optimistic view, the current inflation can be looked upon as an opportunity that can include good prospects in buying rental property at favorable interest rates, along with an increase in rents.
By Robert A. Ortiz, President/CEO
For more information regarding
RNB Property Management, Inc. please call 916-435-2424 or visit us online at
www.RNB2day.com
Current conditions in the real estate market are resulting in favorable circumstances for those looking to buy income property. As more subprime loans reset in 2008, anticipate another wave of short sales and foreclosures to appear, and with the Feds announcing that their priority is the economy, expect interest rates to stay relatively low.
Low interest rates and almost bottom-out prices are creating new investment opportunities and a healthy correction for the real estate industry. Investors have no trouble finding bread and butter properties that create cash-flow with a down payment of 20% or less. The only problem is that the best of these properties under $250k go pending very quickly, and investors are competing with multiple offers that are often above asking price and sometimes involve all cash.
As homeowners lose their homes, how is the rental market affected? We all require the basic necessities of life, and one of them is shelter. With the rise of foreclosures, the transition from homeowner to renter has become more common, and it’s been difficult not only on FICO scores, but on many egos. Most homeowners refuse to move out of their 2500 sq ft home into an apartment or condo, preferring to rent a house, and even then, most will not even consider anything under 1300 sq ft. These new renters are willing to pay a premium for a house that is clean and shows well.
FICO: More than a number
Screening Tenants
There may be some concern, as a landlord, that if potential renters defaulted on their mortgage, they will default on their rent. The truth of the situation is, the majority of transitioning homeowners were doing just fine paying their mortgage until their loan reset. Their new monthly payments almost doubled, while their income remained unchanged; one can easily see how their new mortgage payments became an issue for them.
So how do you screen these tenants? Rather than focusing on the FICO score, look at their other trade lines, such as car loans, credit cards, etc. If the majority of their trades are in good standing with zero to very few 30, 60 and 90 day late payments, and/or they have only a foreclosure, you may be screening a sound prospective tenant who has a history of paying on time. On the other hand, unfortunately those who have tried to survive through a foreclosure nightmare by sacrificing their trades in good standing have made it almost impossible to qualify for a rental. So, if you decide to consider an applicant who has foreclosed, don’t neglect to verify your other objective rental standards. Although many have made a huge financial mistake that has cost them homeownership, we have found that many ex-homeowners still take pride in their homes.
Optimistic Outlook
With a struggling economy and record-setting foreclosures, many paint a picture of bleak times. For those with a more optimistic viewpoint, looking to purchase a new income property or fill a vacant one, there are many “diamonds” waiting to be found. The current real estate market, as with the rest of the economy, will undergo changes, but for those with an optimistic view, the current inflation can be looked upon as an opportunity that can include good prospects in buying rental property at favorable interest rates, along with an increase in rents.
By Robert A. Ortiz, President/CEO
For more information regarding
RNB Property Management, Inc. please call 916-435-2424 or visit us online at
www.RNB2day.com
Tuesday, August 14, 2007
Holding Title as Community Property With Right of Survivorship
This article is for informational purposes only. Nothing in this article should be understood as legal advice, and no attorney-client relationship is created by it or the information it contains. Consult with a licensed attorney if you require assistance in a legal matter. This article is protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of The Burton Law Firm. You may not alter or remove any trademark, copyright or other notice from copies of the content.
Ownership of real property can take a great number of forms. The difficulty is deciding which form of title is right for you, your family, and your business. The facts of your situation will determine how title to property should be held, and properly selecting title form may involve transferring or re-titling property you already own. This article will provide an overview of a new form of title that many people are not yet familiar with: community property with right of survivorship (CPWROS).
Prior to 2001, married couples had to perform a bit of strategic planning when taking title to property. But the California legislature wanted to make it easier for California married couples to take advantage of federal tax benefits. On July 1, 2001, a new form of title was created: community property with right of survivorship. This form of title utilizes the right of survivorship feature while allowing a step-up in basis for community property.
Right of Survivorship
The right of survivorship feature allows the deceased spouse’s property ownership to immediately pass to the surviving spouse upon the first spouse’s death. Generally, no court administration is needed, thus avoiding the time and cost of the probate process.
Step-Up in Basis for Community Property of Both Spouses
A step-up in the basis of property provides an important tax benefit. When you acquire and maintain real property, you invest a certain amount of money in the form of purchase price and improvements. This investment becomes your basis in the property. When you sell or dispose of the property, you recognize a capital gain equal to the current fair market value of the property (i.e., what you sold it for) minus your basis. So if the property has appreciated in value over time, you want your basis to be as close as possible to the fair market value so that you can reduce gain. Reducing gain reduces the taxes that must be paid. A step-up in basis allows you to increase your basis in the property without recognizing any gains, which is a good thing. In a way, stepped-up basis is like the government handing a free investment.
CPWROS provides a large step-up in basis for property owned by a married couple in California. In a joint tenancy, the federal taxation system only allows a step-up in basis for the deceased spouse’s joint tenancy interest. Thus, the surviving spouse receives a stepped-up basis in the property equal to the fair market value of the deceased spouse’s joint tenancy interest.
But with CPWROS, when the first spouse dies and leaves property to the surviving spouse, the surviving spouse receives a step-up in basis both for the deceased spouse’s one-half interest in the community property and for the surviving spouse’s interest in community property. So the surviving spouse acquires a stepped-up basis in all of the community property, not just the deceased spouse’s share.
Conclusion
The goals, finances, and assets of your marriage and your business will all play a role in determining how you should hold title to real property. It is important to note that a properly drafted revocable living trust will provide these and other benefits as well. You should consult with an attorney to help determine whether holding property as community property with right of survivorship is right for your situation.
By The Burton Law Firm
For a more in depth review of this subject, please see: www.lawburton.com, news/resources.
The Burton Law Firm
555 University Avenue, Suite #275
Sacramento, CA 95825
Phone: (916) 570-2740 Fax: (916) 570-2744
www.lawburton.com
info@lawburton.com
For more information regarding RNB Property Management, Inc. please call
916-435-2424 or visit us online at www.RNB2day.com or
Property Management Rocklin
Ownership of real property can take a great number of forms. The difficulty is deciding which form of title is right for you, your family, and your business. The facts of your situation will determine how title to property should be held, and properly selecting title form may involve transferring or re-titling property you already own. This article will provide an overview of a new form of title that many people are not yet familiar with: community property with right of survivorship (CPWROS).
Prior to 2001, married couples had to perform a bit of strategic planning when taking title to property. But the California legislature wanted to make it easier for California married couples to take advantage of federal tax benefits. On July 1, 2001, a new form of title was created: community property with right of survivorship. This form of title utilizes the right of survivorship feature while allowing a step-up in basis for community property.
Right of Survivorship
The right of survivorship feature allows the deceased spouse’s property ownership to immediately pass to the surviving spouse upon the first spouse’s death. Generally, no court administration is needed, thus avoiding the time and cost of the probate process.
Step-Up in Basis for Community Property of Both Spouses
A step-up in the basis of property provides an important tax benefit. When you acquire and maintain real property, you invest a certain amount of money in the form of purchase price and improvements. This investment becomes your basis in the property. When you sell or dispose of the property, you recognize a capital gain equal to the current fair market value of the property (i.e., what you sold it for) minus your basis. So if the property has appreciated in value over time, you want your basis to be as close as possible to the fair market value so that you can reduce gain. Reducing gain reduces the taxes that must be paid. A step-up in basis allows you to increase your basis in the property without recognizing any gains, which is a good thing. In a way, stepped-up basis is like the government handing a free investment.
CPWROS provides a large step-up in basis for property owned by a married couple in California. In a joint tenancy, the federal taxation system only allows a step-up in basis for the deceased spouse’s joint tenancy interest. Thus, the surviving spouse receives a stepped-up basis in the property equal to the fair market value of the deceased spouse’s joint tenancy interest.
But with CPWROS, when the first spouse dies and leaves property to the surviving spouse, the surviving spouse receives a step-up in basis both for the deceased spouse’s one-half interest in the community property and for the surviving spouse’s interest in community property. So the surviving spouse acquires a stepped-up basis in all of the community property, not just the deceased spouse’s share.
Conclusion
The goals, finances, and assets of your marriage and your business will all play a role in determining how you should hold title to real property. It is important to note that a properly drafted revocable living trust will provide these and other benefits as well. You should consult with an attorney to help determine whether holding property as community property with right of survivorship is right for your situation.
By The Burton Law Firm
For a more in depth review of this subject, please see: www.lawburton.com, news/resources.
The Burton Law Firm
555 University Avenue, Suite #275
Sacramento, CA 95825
Phone: (916) 570-2740 Fax: (916) 570-2744
www.lawburton.com
info@lawburton.com
For more information regarding RNB Property Management, Inc. please call
916-435-2424 or visit us online at www.RNB2day.com or
Property Management Rocklin
Disability Guidelines - Part One (Department of Justice Disability Guidelines)
On May 17, 2004, the United States Department of Justice presented guidelines regarding landlords (housing providers) making reasonable accommodations available to tenants and others under the Fair Housing Act (the “Act”). The Department of Justice and the Department of Housing and Urban Development (HUD) are jointly responsible for enforcing the federal Fair Housing Act which prohibits discrimination in housing on the basis of race, color, religion, sex, national origin, familial status, and disability. One type of disability discrimination prohibited by the Act is the refusal to make reasonable accommodations in rules, policies, practices, or services when such accommodations may be necessary to afford a person with a disability the equal opportunity to use and enjoy a dwelling.
Prohibited acts: The guidelines state that “The Act prohibits housing providers from discriminating against applicants or residents because of their disability or the disability of anyone associated with them and from treating persons with disabilities less favorably than others because of their disability. The Act also makes it unlawful for any person to refuse to make reasonable accommodations in rules, policies, practices or services, when such accommodations may be necessary to afford persons with disabilities equal opportunity to use and enjoy a dwelling. The Act also prohibits housing providers from refusing residency to persons with disabilities, or placing conditions on their residency, because those persons may require reasonable accommodations. In addition, in certain circumstances, the Act requires that housing providers allow residents to make reasonable structural modifications to units and public/common areas in a dwelling when those modifications may be necessary for a person with a disability to have full enjoyment of a dwelling.”
In Part Two of this continuing series of articles regarding disability accommodations, we will discuss who is responsible for complying with the Act.
By Gary Link, Attorney at Law
Gary Link, Attorney, is President of the Law Office of Gary L. Link, Inc. Since 1979, Mr. Link has represented landlords in over 35,000 eviction cases and litigated over 10,000 eviction trials. He is a member of the California Apartment Association, the Rental Housing Association, as well as a member of the local, state, and national bar associations. For questions relating to this article, call the law office at 916-447-8101. The information in this article is applicable as of 2007. Because laws may change please contact the law office to affirm continuing validity of the contents of this article.
For more information regarding RNB Property Management, Inc. please call
916-435-2424 or visit us online at www.RNB2day.com or
Property Management Rocklin
Prohibited acts: The guidelines state that “The Act prohibits housing providers from discriminating against applicants or residents because of their disability or the disability of anyone associated with them and from treating persons with disabilities less favorably than others because of their disability. The Act also makes it unlawful for any person to refuse to make reasonable accommodations in rules, policies, practices or services, when such accommodations may be necessary to afford persons with disabilities equal opportunity to use and enjoy a dwelling. The Act also prohibits housing providers from refusing residency to persons with disabilities, or placing conditions on their residency, because those persons may require reasonable accommodations. In addition, in certain circumstances, the Act requires that housing providers allow residents to make reasonable structural modifications to units and public/common areas in a dwelling when those modifications may be necessary for a person with a disability to have full enjoyment of a dwelling.”
In Part Two of this continuing series of articles regarding disability accommodations, we will discuss who is responsible for complying with the Act.
By Gary Link, Attorney at Law
Gary Link, Attorney, is President of the Law Office of Gary L. Link, Inc. Since 1979, Mr. Link has represented landlords in over 35,000 eviction cases and litigated over 10,000 eviction trials. He is a member of the California Apartment Association, the Rental Housing Association, as well as a member of the local, state, and national bar associations. For questions relating to this article, call the law office at 916-447-8101. The information in this article is applicable as of 2007. Because laws may change please contact the law office to affirm continuing validity of the contents of this article.
For more information regarding RNB Property Management, Inc. please call
916-435-2424 or visit us online at www.RNB2day.com or
Property Management Rocklin
Tax Saving Strategies for Real Estate Investors
There are many tax saving strategies that attract investors to real estate investments. Paying capital gains on profits at 15% rather than up to 35% on ordinary profits is one such strategy. There are a variety of other ways to save your dollars. In each Landlord Today article, we will focus on one tax saving strategy you or your current tax preparer may not have thought about.
Make the Most of Depreciation.
As mentioned above, most know that depreciating their properties brings tax savings, but a lot of investors miss valuable depreciation deductions because they don’t know how to make the most of them. The following steps will help you get more annual depreciation to save tax dollars:
Step 1: Divide basis between “land” and “improvements.” Remember land provides no depreciation, so the goal is to assign as much as possible to depreciable improvements. The IRS suggests you use local property tax assessments. You can use any allocation (such as bank appraisal or your insurer’s estimate of replacement costs) so long as you show “reasonable basis.” Don’t forget that driveways and sidewalks crack, landscaping needs replacing, and pipes from the house to the street deteriorate over time. Consequently, you can depreciate land improvements over 15 years. If you miss those assets, you lose money!
Step 2: Split out components of the building to get shorter depreciation periods. Buildings depreciate over 27.5 years for residential property and 39 years for nonresidential property. But isn’t a building a collection of components? Of course it is. Buildings include structural components like walls, roofs, furnaces, and windows that are integral to the building. These depreciate over the traditional 27.5 and 39-year periods. But buildings also include personal property that depreciates over just 5 years. It makes sense that if you allocate part of your purchase to that personal property, you’ll boost your depreciation during the first few years you own your property. These are probably the years you need it most! Personal property examples include cabinets, countertops, dishwashers and carpeting.
By Richard Lagomarsino, EA
Richard is the president of FTMS Inc. Go to www.ftms.net for more helpful information.
For more information regarding RNB Property Management, Inc. please call
916-435-2424 or visit us online at www.RNB2day.com or
Property Management Rocklin
Make the Most of Depreciation.
As mentioned above, most know that depreciating their properties brings tax savings, but a lot of investors miss valuable depreciation deductions because they don’t know how to make the most of them. The following steps will help you get more annual depreciation to save tax dollars:
Step 1: Divide basis between “land” and “improvements.” Remember land provides no depreciation, so the goal is to assign as much as possible to depreciable improvements. The IRS suggests you use local property tax assessments. You can use any allocation (such as bank appraisal or your insurer’s estimate of replacement costs) so long as you show “reasonable basis.” Don’t forget that driveways and sidewalks crack, landscaping needs replacing, and pipes from the house to the street deteriorate over time. Consequently, you can depreciate land improvements over 15 years. If you miss those assets, you lose money!
Step 2: Split out components of the building to get shorter depreciation periods. Buildings depreciate over 27.5 years for residential property and 39 years for nonresidential property. But isn’t a building a collection of components? Of course it is. Buildings include structural components like walls, roofs, furnaces, and windows that are integral to the building. These depreciate over the traditional 27.5 and 39-year periods. But buildings also include personal property that depreciates over just 5 years. It makes sense that if you allocate part of your purchase to that personal property, you’ll boost your depreciation during the first few years you own your property. These are probably the years you need it most! Personal property examples include cabinets, countertops, dishwashers and carpeting.
By Richard Lagomarsino, EA
Richard is the president of FTMS Inc. Go to www.ftms.net for more helpful information.
For more information regarding RNB Property Management, Inc. please call
916-435-2424 or visit us online at www.RNB2day.com or
Property Management Rocklin
Single Family Residential Rental Survey - 3rd Quarter 2007
We all know real estate prices are continuing to fall and that foreclosures and short sales are on the rise. But what does this mean for the rental industry? Most would-be buyers are convinced the market has not yet bottomed out; in the meantime they will choose to rent. The thousands of home owners who have lost their homes due to foreclosure or short sale will rent. And a select few have found that an alternative to losing their 3200 square foot home to the bank is to rent it out. They then opt to rent a 1300 sq ft home to live in, saving up to $800 a month. For the present, renting also remains a better alternative to buying as underwriters tighten their restrictions, and interest rates slowly rise. The demand for rentals is increasing, but what about the supply? Surprisingly, new home construction continues, thus a significant amount of surplus homes for sale are beginning to transition into rentals. This trend may actually create a surplus of rentals in 2008. Today’s balance in supply and demand has created an active and healthy rental market. As the holidays approach and the school year begins, expect the average number of days-on-market to increase and the demand to rent or buy a new home to decrease. In every market at any given time there is always opportunity for today’s investor.
For an investor looking to buy an income property, the real estate market is great and looking to get even better. For those investors ages 55 and greater, the Sun City community homes are a great investment opportunity. Expect to find sound tenants with excellent credit and rental histories and as the baby boomers continue to retire this market will continue to improve.
Putting opinion and preference aside, let’s look at the facts: According to InfoTracker’s third quarter rental survey, in comparison to second quarter numbers, rents have increased in Rocklin’s 95677 by +8.5% and decreased -5% in 95765. West Roseville rents on average have increased +4.8% in 95678 and +5.5% in 95747 compared to a -7% decline in East Roseville’s 95661. According to an article published on Forbes.com in July 2007 entitled “The Fastest-Growing Suburbs in America,” the city of Lincoln ranks as number one with an +8.3% increase in rents and a 236% increase in population from 2000 to 2006. Although rents are increasing in key sub markets and home values are continuing to depreciate it will still be more than a few years before we see single family income properties in this area pencil out as they once did in 1999.
In today’s dynamic real estate market, the rental market is a very popular alternative to owning. If the current trends continue and interest rates remain reasonable, count on new investment opportunities to appear in these growing sub markets. Although we can all speculate on the future of tomorrow’s real estate market, the numbers provide information on the direction of today’s market. Utilizing this information, investors will make their move and the mass of speculators in turn will follow. With the holiday season and school year approaching, look to a professional to rent up and manage your property so you can capitalize on the highest rate of return on your investment.
By Robert A. Ortiz, President/CEO
For more information regarding RNB Property Management, Inc. please call
916-435-2424 or visit us online at www.RNB2day.com or
Property Management Rocklin
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