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Featured Articles
One Person’s Trash is Another Person’s Treasure!
Discover how you can help recycle construction or deconstruction products.
GO GREEN
Everyone has ideas about greening residential real estate, but what about commercial investment property going green. Share your experiences or questions…comment here!
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Mandatory Access for Telecommunications Providers?
Mandatory Access to Commercial Property for Telecommunications Providers?
How do the contracts between commercial or multi-family property owners affect Tenants? The FCC is asking for your comments on an issue that could affect who has access to your property.
[Read More...]To Exchange or Not to Exchange…that is the Question!
Whether ‘tis better to sell and pay taxes or by deferring gain to leverage your portfolio?
Section 1031 of the Internal Revenue Code provides that neither gain nor loss is recognized if property held for investment use in trade or business is exchanged for like property. The term “like kind” refers to the grade or quality of the property, not a specific type or class. Thus, single family rentals can be exchanged for a retail strip center, commercial or industrial property.
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Real Estate
Beach Duplex for Rent
In Corona Del Mar very close to the beach. Near shops & restaurants (Zinc Cafe, Banderas, Rose Cafe), markets, hardware store, farmers market, cleaners.
416 Larkspur Ave. -Large 2 bedroom + Loft + 2 Enclosed Garages with an extra large master bedroom and spa tub. - $3,600
416 1/2 Larkspur Ave. - 1 Bedroom, 1 Bath in Upper Rear Unit of Duplex. Modern style with carport, washer dryer hook-ups, utility closet on porch landing. - $1795
Contact Phyllis Miller
213.999.2425
pmiller@actionrealtysales.com
Interest Rate Even Lower
The Federal Reserve has slashed interest on federal funds to 0.25%. In October rates fell to 1 percent, the lowest they had been since 1958. Since then there has been speculation that the central bank might reduce the rate even more if they fail to achieve the desired results but no one was sure how low they could go. This decrease is yet another attempt to jump-start the ailing economy and encourage credit and lending.
President Signs the Housing and Economic Recovery Act of 2008 Into Law
On Wednesday, July 30 the Act was signed into law. The Housing and Economic Recovery Act of 2008, which authorizes the Department of the Treasury to purchase obligations of housing Government Sponsored Enterprises (GSEs); reforms the regulatory supervision of the housing GSEs; provides reform of the Federal Housing Administration; provides homeownership assistance and reforms to mitigate recent increases in foreclosures; and contains housing-related tax incentives and other tax provisions.
Take a look at the Bill
Hot Weather is Here and You can Help your Tenants Save Money and the Environment
1. To be eligible for the rebate: (a) I must be a Southern California Edison customer on a residential, GS-1 or GS-2 rate, and (b) the service(s) I have completed must (i) qualify for the rebate, (ii) be performed at a single-family residential dwelling, or (iii) at a business less than 200kW, fully constructed and occupied, within SCE’s service area. I understand I must complete and submit an Application for each service at each address where a qualifying service has been performed. For small business customers, the program is limited to the building owner or the entity responsible for purchasing and maintaining the air conditioning. Tenants who wish to participate must have the building owner’s permission.
2. The A/C Tune-Up Program term is April 1, 2008 through July 31, 2008, yet may end sooner if allocated funds are depleted. Any service(s) performed prior to April 1, 2008 or after July 31, 2008 will not qualify for a rebate. Limit two (2) rebates per residential service account.
3. Funds are limited. Applications are accepted on a first-come, first-served basis. The A/C Tune-Up Program may be modified or terminated without prior notice. In the event that rebate amounts change, the service date will be used to determine eligibility and the Application postmark date will be used to determine rebate amount, if any.
4. A signed and dated Application, and a copy of the contractor’s invoice, must be sent to Southern California Edison A/C-Tune-Up, PO Box 800, Rosemead, CA 91770 and postmarked no later than August 31, 2008 to be considered eligible for a rebate. After SCE receives a submitted Application, determines that it is complete and accurate and approves it for payment, a bill credit (Policy Adjustment) will appear on the customers’ SCE monthly bill statement within six to eight weeks at the address on record for the service account. SCE reserves the right to select any Application for verification, or reject any incomplete Application(s). If an Application is selected for verification, additional time may be required before the bill credit (Policy Adjustment) is applied.
5. I will allow, if requested, SCE’s and/or the California Public Utilities Commission’s (CPUC) representative(s) reasonable access to my home or business to verify completion of the qualifying service I have purchased, prior to payment of a rebate. I understand that a rebate will not be paid if I refuse to participate in any required verification. I understand that if I refuse to participate in or fail any required verification after receiving a rebate, I may be required to repay to SCE the amount of any rebate received. The verification of service must be scheduled within 30 days of customer contact by SCE. I understand that SCE may contact the qualifying service provider to verify service performed and may provide my name and/or address to complete this verification.
6. The qualifying service(s) must be performed by a company licensed and able to perform air conditioning maintenance services as evidenced by a valid California C-20 contractor’s license. License status can be confirmed at www.clsb.ca.gov. I understand that I cannot receive a rebate for the same product from more than one California investor-owned utility or third party energy efficiency program offering rebates, financing or other incentives funded with CPUC Public Goods Charge funds.
7. I agree that the selection of qualifying service(s), selection of licensed contractor(s) and purchase of the qualifying service(s) referenced in this Application are my sole responsibility, and the provider of these services is not an agent or representative of SCE.
8. I understand that SCE makes no representations regarding contractors, materials or workmanship. I ALSO UNDERSTAND THAT SCE MAKES NO WARRANTY WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, USE, OR APPLICATION OF THE PRODUCTS.
9. I agree that SCE has no liability whatsoever concerning (1) the quality, safety and/or installation of the service(s), including their fitness for any purpose, (2) the estimated energy savings of the services, (3) the workmanship of any third parties, or (4) any other matter with respect to the 2008 A/C Tune-Up Program. I waive any and all claims against SCE, its parent companies, affiliates companies, directors, officers, employees, or agents, arising out of activities conducted by or on behalf of SCE in connection with my Application for any rebate(s) under the 2008 A/C Tune-Up Program. Without limiting the generality of the foregoing, none of such parties shall be liable hereunder for any type of damages, whether direct, or indirect, incidental, consequential, exemplary, reliance, punitive or special damages, including damages for loss of use, regardless of the form of action, whether in contract, indemnity, warranty, strict liability or tort, including negligence of any kind.
10. I am responsible for meeting all 2008 A/C Tune-Up Program requirements and complying with my state/county/city governments, property owner and/or homeowners association requirements (if any) in my area regarding local conditions, restrictions, codes, ordinances, rules, and regulations concerning this service(s).
11. SCE is not responsible for items lost or destroyed in the mail/transit.
12. You certify that the information you have provided is true and correct, and that the service(s) for which you are requesting a rebate meet(s) the requirements in this application.
This program is funded by California utility ratepayers and administered by SCE under the auspices of the California Public Utilities Commission. Funding for this program is limited and is available on a first-come, first-served basis until allocated funds are exhausted, or July 31, 2008, whichever comes first. This program may be modified or terminated without prior notice.
Realtors Mobilize to Prevent Additional Costs to Real Estate Transactions
California Association of Realtors initially OPPOSED AB 2678 (Núñez) because it effectively would have required, among other things, that ALL homes and commercial property in California have an energy audit at point-of-sale, and that mandatory energy efficiency investments be made. While C.A.R. appreciates the goal of energy conservation, C.A.R. strongly opposes point-of-sale requirements because they are ineffective and because such mandates will weaken the housing market. If enacted as introduced AB 2678 could have added even tens of thousands of dollars to the cost of purchasing a home.
After thousands of REALTORS® called their legislators in opposition to the bill and thousands more lobbied against the bill in person last week at Legislative Day, the bill’s author amended AB 2678 to remove the point-of-sale requirement. The bill was further amended at C.A.R.’s request, to ensure that energy audits or improvements are not required as a condition of sale. With these changes, C.A.R. SUPPORTS AB 2678.
[Read More...]Exchanging Property You Didn’t Know You Had
Transferable Development Rights for Real Property “Development Rights” is defined as unused rights to develop a property to the extent permitted under state or local law. As states and municipalities have acted to restrict and regulate new construction, the value of development rights has skyrocketed. In recent years, some states and local governments have adopted rules permitting unused development rights to be transferred to another parcel.These development rights can then be used to construct improvements, such as a building with greater floor space or height than would be permitted in the absence of those development rights. Accordingly, an owner of excess development rights may reap a substantial financial windfall by selling the Transferable Development Rights (“TDRs”) to the owner of another parcel who desires to develop the other parcel.
Of course, where there is a potential gain, there is a potential tax and the question arises whether gain resulting from a sale of TDRs can be deferred by exchanging TDRs for a fee interest in real property under Internal Revenue Code Section 1031. More precisely, are TDRs “like-kind” to a fee interest in real property? In PLR 200805012, the Internal Revenue Service (“IRS”) addressed that question squarely. The IRS noted that “[t]he types of property rights and interests that constitute interests in real property . . . for purposes of §1031 are broad” and that “[w]hether property constitutes real or personal property generally is determined under state or local law.” The IRS went on to analyze the two issues commonly addressed in a real property like-kind analysis: (i) the nature of the rights represented by the TDRs (e.g., whether TDRs constitute an interest in real property), and (ii) the duration of the rights obtained under the TDRs.
In determining whether the TDRs constituted an interest in real property, the IRS noted that certain tax statutes in the state in which the TDRs were located treated TDRs as real property. “Although it is unclear whether development rights are treated as interests in real property for all purposes” of state law, it was clear that sections of state’s tax statute and regulations “treat development rights as an interest in real property.” Moreover, a local administrative agency had held that a transfer of development rights was subject to State gains tax as a transfer of real property. The IRS also noted that, similar to a deed, the transfer of development rights was subject to transfer taxes imposed by both the city and state in which the TDRs were located. Accordingly, the IRS found that the TDRs in question constituted an interest in real property under the state’s laws.
The IRS then considered the duration of the rights obtained under the TDRs, because an interest in real property must be of sufficient duration to be considered like-kind to a perpetual fee interest in real property. The IRS found that “various sections of the local ordinances cited by taxpayer provide that development rights are as-of-right and not discretionary, meaning that they exist permanently rather than at the discretion of a city agency or other decision-making authority. As such, these rights appear to be analogous to perpetual rights.”
As a final matter, the IRS considered whether the taxpayer’s use of the TDRs to benefit a property already owned by the taxpayer presented a problem in the exchange. Citing Revenue Ruling 68-394,1968-2 C.B.338, a case in which a taxpayer acquired a tenant’s leasehold interest on property he already owned as replacement property for certain other property that was condemned, the IRS concluded that “it is not material that the property acquired by the taxpayer as the replacement property is on property already owned by that taxpayer so long as it is acquired in an arm’s length transaction.”
Given the IRS’s analysis above, it would appear that a taxpayer could sell development rights for other like-kind real property just as easily as the taxpayer might purchase development rights as replacement property. (See, e.g., PLR 8141112 in which taxpayer sold agricultural land development rights to State as relinquished property.) Thus, in certain instances, residual development rights should be considered for exchange in the event that the taxpayer does not plan to use them in the future. Of course, any such transaction should be considered only after careful consideration of local laws governing TDRs in the jurisdiction in which the taxpayer owns investment property. A taxpayer may not rely upon a private letter ruling, so caution is warranted and competent tax advice should be obtained in connection with any such transaction.
NEW - The IRC §1031 Tax Handbook
This 550+ page handbook* is a 1031 related legal reference for financial advisors, accountants and attorneys and is available on-line or via CD-ROM. It contains many important Revenue Rulings, Revenue Procedures, Tax Court Decisions, Private Letter Rulings and articles written by our legal staff. Arranged by topic, you can view information quickly on a wide range of §1031 exchange related subjects. This handbook is available in a user-friendly e-magazine format, offering you a fast and simple resource to obtain information on a particular topic within the handbook.
Click here to access our §1031 Tax Handbook: Reference Information for Legal and Tax Advisors
*None of the legal references or editorial materials contained in The IRC §1031 Tax Handbook are intended to be relied upon in a particular case as tax or legal advice. API makes no representation concerning the completeness of the cases, rulings and regulations cited in connection with a particular topic. Resolution of a specific tax question will likely require reference to other more comprehensive and regularly updated legal reference sources.
[Read More...]One Person’s Trash is Another Person’s Treasure!
Discover how you can help recycle construction or deconstruction products.
Port to Build ‘Green’
The Port of Long Beach is making plans to build a new “green” headquarters building as it pursues a larger program to clean up the air at the complex.The nine-story, $218 million structure would replace its current cramped headquarters, which was built nearly five decades ago.
The new building will include a variety of environmental features, including a design that uses natural light to cut energy usage, which the port says will qualify it for environmental certification from the U.S. Green Building Council.
“This upfront investment would give us long-term savings on energy costs, a more efficient workplace and more publicly accessible facilities,” said Richard Steinke, the port’s executive director, in a statement.
The port plans to gather comments from the public before proceeding with construction, which would take about five years to complete.
The announcement comes as the port pursues a plan that would replace thousands of old, diesel-spewing trucks that carry goods to local warehouses. The port complex, which includes the neighboring Los Angeles port, is the largest single contributor to air pollution in Los Angeles.
By RICHARD CLOUGH
© 2008 Los Angeles Business Journal Associates. All rights reserved.
[Read More...]Can I Evict a Tenant from a Rent Controlled Apartment Building?
That depends upon the property location (governing city ordinance), how long the tenant has lived there, and the purpose of the eviction. If you own rental income property in Santa Monica, Beverly Hills, West Hollywood, Los Angeles, and Newport Beach, you will be dealing with potenially 5 different rules and regulations. Laws change: stay informed. Contact your realtor for additional information and resources.
Test Your Real Estate IQ
As a Los Angeles based Commercial Realtor®, actionrealtysales is committed to providing the highest level of professional counsel to every client, in every engagement. It is important that sellers, and/or their representatives come to the engagement with awareness of some of the basic guidelines and terms involved in the transaction. Here are a few questions that allow you to test your “Real Estate IQ”:
1. Can I exchange a single family residence for a commercial property through a deferred exchange?
2. Can I buy a new property before I sell the one I own and still take advantage of the deferred gain in a 1031 exchange?
3. Why do I need to consult a local Commercial Realtor® if I am contemplating the sale of an building that is less than 4 units?
4. What are Estoppels and how are they used in the sale of commercial property?
5. Are there any special requirements in the sale of a property by an LLC?
6. Are the best “deals” in foreclosure properties?
7. In disposing of a commercial property owned by a trust, how does length of ownership impact potential tax consequences?
8. If I sell my property “As Is”, do I still need to disclose obvious defects?
9. How does a gas station a block from my property impact the sale of my property?
10. How do I present my income/expense information to prospective buyers in the best possible light?
Call us today for the answers.
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