FRee Real Estate Training Archives

It’s Official: Fed Raises Rates for First Time in 9 Years

Unanimous decision for 0.25% raise
(Source: Federal Reserve)

The Federal Open Market Committee announced in its December meeting that it is officially raising the federal funds rate for the first time since June 2006.

In a statement released Wednesday by the Federal Reserve, the FOMC said that it will gradually raise the federal funds rate to a range of 0.25% to 0.50%

“Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the committee decided to raise the target range for the federal funds rate to 0.25% to 0.50%. The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2% inflation,” the FOMC said in a statement.

Moving forward, the FOMC said, “In determining the timing and size of future adjustments to the target range for the federal funds rate, the committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2% inflation.”

All FOMC members voted unanimously.

According to the economic projections of Federal Reserve Board members and Federal Reserve Bank presidents under their individual assessments of projected appropriate monetary policy, the federal funds rate is projected to grow from 0.4% in 2015 to 3.4% in 2018.

During the October meeting, the Federal Reserve said that it would not raise the federal funds rate at that time, citing the fact that the country’s economy still had not met the targets laid out by the FOMC.

However, since that meeting, Fed Chair Janet Yellen has said in a Congressional committee hearing on the U.S. economy that the current outlook and the flow of data since the central bank’s last meeting in October are “consistent” with the rate hike criteria spelled out by U.S. policymakers.

And in November, in a speech before the House Financial Services Committee, Yellen formalized the possibility of a rate hike in December, telling the Committee that a rate increase in December was a “live possibility.”

Recent housing news also supported a rate hike, with the November jobs report showing that job creation increased by 211,000 for the month. Consumer spending echoed that, recording solid growth in November.

What are your thoughts and comments?

Last-minute Tax Planning Strategies to Consider as the 2015 tax year closes

Last-minute tax planning strategies to consider as the 2015 tax year closes

In between preparing for the year-end holidays, school vacations, travel, work, and so on, tax planning should not be on the back burner. Although 2015 is quickly coming to a close, there is still time, with careful planning, to execute some last minute tax strategies. In many cases, these strategies can help minimize the tax burden. Of course, every individual’s situation is different, so please contact our office for specific details about a year-end tax planning strategy customized to you.

Extenders

For many taxpayers, one of the most significant questions looming over 2015 returns is will they be able to claim all the deductions, credits and incentives that were available in 2014? Many of these incentives are grouped in a package known as the tax extenders. If you have taken in 2014 (or in a prior year) the state and local sales tax deduction, higher education tuition deduction, teacher’s classroom expense deduction, IRA distribution to charity, among others, you enjoyed the benefit of a tax extender.

Under current law, these popular tax breaks expired after 2014. That means they are no longer available for 2015, unless they are renewed by Congress. At this time, it is highly likely that Congress will vote to extend the extenders at least for 2015. Congress could approve a two-year extension. A vote is expected before January 1, 2016. However, Congress could delay the vote until early January. Uncertainty is never far from the extenders, but the best approach is to develop a year-end planning strategy that reflects both an extension of the extension and develop another plan that does not.

For example, qualified taxpayers contemplating making a gift to a charitable organization should take into account renewal of the tax break for gifts to charity from an IRA. If all the requirements are met, this may be a valuable tax break. However, there are other avenues for gifts to charity that can help maximize tax savings if you do not qualify for the deduction or the deduction is not renewed. Also, keep in mind the rules for substantiating gifts to charity. You do not want to lose the tax benefit of a generous gift to charity because these substantiation rules were not followed. Our office can explore these strategies with you.

While taxpayers wait for action on the extenders, tax bills already passed in 2015 could be valuable. The Defending Public Safety Employees’ Retirement Act expands the exemption from the penalty for early retirement withdrawals to include certain federal law enforcement officers, federal firefighters, customs and border protection officers, and air traffic controllers. The Surface Transportation Act of 2015 provides that a veteran’s eligibility to contribute on a pre-tax basis to a health savings account (HSA) is not affected by receipt of medical care from the VA for a service-connected disability.

Traditional techniques

The roster of traditional year-end tax planning strategies is lengthy and often involves methods to shift income between 2015 and 2016. To postpone income to 2016, taxpayers can consider delaying plans to sell appreciated assets, redeem U.S. savings bonds, completing Roth IRA conversions, and so on. If possible, it may be worthwhile to postpone any bonuses until after 2015. In contrast, some taxpayers may want to accelerate income into 2015. This can be particularly valuable if a taxpayer expects to be in a higher tax bracket in 2016 compared to 2015.

When considering traditional year-end techniques, keep in mind the 3.8-percent net investment income (NNI) tax. The NII tax applies to the lesser of (1) an individual’s net investment income (NII) or (2) the excess of the individual’s modified adjusted gross income (MAGI) over the threshold amount. The thresholds are $250,000 for married taxpayers filing a joint return and surviving spouses; $125,000 for married taxpayers filing a separate return; and $200,000 for all other taxpayers.

Gift-making

Gift-making is an important year-end tax strategy that can be overlooked. The Tax Code allows taxpayers to give away up to an “annual exclusion amount” per recipient per year free of gift tax. For 2015, the annual exclusion amount is $14,000. If property is given instead of cash, the value of the gift is the fair market value of the property. If spouses consent to split all gifts that are made by either one of them during any year and each spouse is also a U.S. citizen or resident, then the gifts can be deemed as having been made one half by each spouse. As a result, spouses who consent to split their gifts can transfer twice the annual per-recipient exclusion amount each year, free of gift tax ($28,000 for 2015).

These are just some of the tax strategies to consider before year-end.
Please contact my office for more details.

Message from Mike Butler

“Are you looking for a real estate investor expert CPA? Did you know my CPA, Mike Grinnan can prepare your tax returns?… anywhere in the U.S.A. – his 5 Star software makes this. FYI, Mike Grinnan has been doing a superstar Chicago investor’s tax returns for over 10 years now. Mike Grinnan is one of America’s 5 Star CPAs for real estate investors”

GrinnanMikeCPA

 J. Michael Grinnan, CPA.CITP
Certified Public Accountant
9900 Corporate Campus Drive, Suite 3000
Louisville, KY 40223
Office 502-657-6333

Email   Mike@JMGCPA.com

Website www.JMGCPA.com

 

 

MEDIA RELEASE – US District Court Ruling Protects Property Owners from Unnecessary Gov’t Harassment

National REIA Applauds US District Court Ruling Upholding Fourth Amendment that Protects Property Owners from Unnecessary Gov’t Harassment
Cincinnati, Ohio)  The National Real Estate Investors Association (National REIA) issued a statement today applauding the U.S. District Court’s (Southern Ohio) recent decision stating that the city of Portsmouth’s (Ohio) occupational licensing requirements, which are imposed upon landlords violates the Fourth Amendment to the United State Constitution. 
 
Charles Tassell, Chief Operating Officer of National REIA said “Today’s ruling laid bare the excuses used by local governments to steal the freedoms of property owners.”
He further added that “The 4th Amendment is still alive and well, and citizens should NOT be forced to have their homes intrusively ‘inspected’ by warrantless searches.  Every local government should take note that warrantless searches are STILL illegal and unconstitutional.”
 
Regarding the ruling itself, Tassell said “The ruling won by the 1851 Center For Constitutional Law was a victory for freedom against a tyranny with which the Founding Fathers were all too familiar.  Citizens of the United States have an expectation to live without local, state or federal inspection of their home based on flimsy excuses disguised as law.”
 
Judge Susan Dlott, of the Western Division of the Southern District of Ohio, held as follows: “[T]he Court finds that the Portsmouth [Rental Dwelling Code] violates the Fourth Amendment insofar as it authorizes warrantless administrative inspections.  It is undisputed that the [Rental Dwelling Code] affords no warrant procedure or other mechanism for precompliance review . . . the owners and/or tenants of rental properties in Portsmouth are thus faced with the choice of consenting to the warrantless inspection or facing criminal charges, a result the Supreme Court has expressly disavowed under the Fourth Amendment.”
 
For more information and to read a copy of the the Court’s ruling visit www.realestateinvestingtoday.com.

FORECLOSURE UPDATE – Fannie Mae extends foreclosure timelines in 33 states

September 3, 2015 4:49PMforeclosure_forsale_sign

Fannie MaeForeclosureForeclosure salesforeclosure timelinesForeclosuresjudicial foreclosurejudicial vs non-judicial statesmortgage servicing
 
 

Fannie Mae announced that it is increasing the maximum number of allowable days for “routine” foreclosure proceedings for much of the country.

In total, Fannie Mae increased the maximum number of allowable days for a foreclosure sale for 33 states, effective for foreclosure sales on or after Aug. 1.

Fannie Mae made the announcement Thursday in an email to its servicers.

According to the announcement, Fannie Mae increased the maximum number of allowable days for the following jurisdictions: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Nevada, New Mexico, New Hampshire, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

As part of its servicing guide, Fannie Mae establishes time frames under which it expects routine foreclosure proceedings to be completed.

According to Fannie Mae, the maximum number of allowable days takes represents the maximum allowable time lapse between the due date of the last paid installment and the completion of the foreclosure sale.

The allowable time frame also signifies the time typically required for what Fannie Mae calls a “routine, uncontested” foreclosure proceeding.

The allowable time frame reflects the legal requirements of the applicable jurisdiction, and takes into consideration delays that may occur outside of the control of the servicer, Fannie Mae said.

If the number of days to complete a foreclosure sale exceeds stated maximum number of allowable days and the servicer does not provide an adequate explanation to Fannie Mae as to the reasons for the delay, Fannie Mae requires the servicer to pay a “compensatory fee.”

According to Fannie Mae, the list of “reasonable explanations” includes:

  • Bankruptcy
  • Probate
  • Military indulgence
  • Contested foreclosure
  • The mortgage loan is currently in review for HAMP
  • The mortgage loan is in an active mortgage loan modification trial plan or unemployment forbearance
  • Recent legislative, administrative, or judicial changes to existing state foreclosure laws, provided that the servicer is diligently working toward resolution of the delay to the extent feasible

Fannie Mae noted in its announcement that there is currently a compensatory fee moratorium for Washington D.C., Massachusetts, New York and New Jersey and stated that the moratorium will last, “at a minimum,” until Dec. 31.

Can an S Corporation Own An Interest in Another Business Entity?

Can an S corporation own an interest in another business entity?


An S corporation may own an interest in another business entity.

An S corporation can be a member of an affiliated group by owning 80 percent or more of the stock of a C corporation. The group then can elect to file on a consolidated basis, if other affiliated group rules are met. But the S corporation itself cannot join the consolidated group.

Although in general only individuals can be shareholders in an S corporation, an S corporation can own an S corporation if the subsidiary corporation would otherwise qualify as an S corporation if the parent’s shareholders held the subsidiary’s shares directly, and the taxpayer elects qualified S corporation status for the subsidiary.

Generally, for federal tax purposes a corporation that is a qualified S corporation subsidiary is not treated as a separate corporation, and all assets, liabilities, and items of income, deduction, and credit of a qualified S corporation subsidiary are treated as assets, liabilities, and items of income, deduction, and credit of the S corporation.

An S corporation can also be a partner in a partnership or a member of an LLC.

 

J. Michael Grinnan, CPA.CITP
Certified Public Accountant
9900 Corporate Campus Drive
Suite 3000
Louisville, KY 40223
Main Number 1-502-657-6333
Email Mike@JMGCPA.com.

 

My Book Makes Bigger Pockets “7 Top Business Books to Help You Put Vital Systems in Place”

Bigger Pockets and Brandon Turner hit another home run!!  

Making the Bigger Pockets “7 Top Business Books To Help You Put Vital Systems In Place” is like winning an Oscar or an Emmy! Thank You again.

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BONUS 1: a brand new form, not in my book, named the “Animal Application Form” 

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BONUS 3: “How I Bought 50 Houses in a Year While Working My Full Time Job” mp3 audio, (keep in mind, I started with less than $1,000 in my savings account and I have never gone to a bank to buy an investment property.)

To Redeem Your 7 Top Books Bonus, simply buy my book, then email a legible PDF or cell phone photo of your receipt to News@MikeButler.com 

To Your Continued $uccess,

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P.S. you can call Eric at 502-655-1966 to order as well

 

FAIR HOUSING – New U.S. Supreme Court Ruling Outlaws Chinatowns and more!

Good Saturday Morning!,

this morning, I got an email with a link to a new article on the effects of the recent U.S. Supreme Court decision involving Fair Housing.

This is a fantastic follow up from this week’s POWER LUNCH Chalk Talk webinar on Tuesday
(Free Investor Training Weekly Webinars at noon)

Here’s a short part of the article and the link is below to see the full article.

Kiss Chinatown goodbye under Obama data-mined racial quota system?

 ‘After the recent Supreme Court ruling on “disparate impact” in housing, Amy predicted that social justice activists and lawyers had been given powerful precedent to use racial and ethnic data mining against developers who did not intentionally discriminate:

When the Supreme Court handed down its ruling in Texas Department of Housing v. Inclusive Communities Project last week, social justice activists claimed a major victory in the battle against segregated housing. The decision endorsed a “disparate impact” analysis as applied to a Texas program that plaintiffs claimed distributes federal low income housing credits disproportionately, awarding too many credits to inner-city, predominately black neighborhoods and too few to suburban, predominately white neighborhoods….

Kennedy and the majority endorsed a form of social engineering just as pernicious as those that disparate impact analyses aim to correct. Instead of creating “more equality,” these methods do nothing but invent controversies for social justice groups and the courts to work out, and, as Clarence Thomas says, presume that defendants are “guilty of discrimination until proved innocent.”

Here’s the link to view the entire article
http://legalinsurrection.com/2015/07/kiss-chinatown-goodbye-under-obama-data-mined-racial-quota-system/ 

Special Thanks to Bill Rafter for sharing!

 

Free Investor Training Webinar – POWER LUNCH “Chalk Talks”

PowerLunchRegister2

Tax Update for Real Estate Investors from my CPA

by J. Michael Grinnan CPA

POST Election Congress Grapples with Extenders as Lawmakers Plan for 2015

The results of the mid-term elections create a new dynamic in Congress with Republicans poised to take control of both the House and Senate in January. Prospects for tax reform may have brightened for 2015. In the meantime, the lame-duck Congress must deal with some urgent tax bills, most notably the tax extenders.

Expired tax breaks

As the 2015 filing season grows closer, lawmakers are under pressure to renew a package of expired tax incentives, known as tax extenders. There are more than 50 expired extenders that impact individuals and businesses. For individuals, some of the most far-reaching are the above-the-line deduction for higher education expenses, state and local sales tax deduction, mortgage debt forgiveness, deduction for mortgage insurance premiums, credit for energy improvements to personal residences, and the teachers’ classroom expense deduction. For businesses, the expired incentives include the research tax credit, special expensing rules for film and television productions, bonus depreciation, enhanced small business expensing, incentives to encourage production of wind energy and alternative fuels, and many more. All of these incentives expired after December 31, 2013. That means taxpayers cannot claim them on their 2014 returns filed in 2015 unless the incentives are extended.

Many Congressional staffers and Hill observers predict that lawmakers will renew the extenders in December. A vote could come in the House and Senate before December 20. A comprehensive extenders bill, the EXPIRE Act, is pending in the Senate. A similar bill, however, has not moved in the House. Instead, the House voted to extend some but not all of the extenders. Before year-end, the Senate could approve the EXPIRE Act and send the bill to the House. The Congressional Budget Office estimates that extending all of the expired provisions would cost $94 billion over two years (reflecting a retroactive extension to January 1, 2014 and an extension through the end of 2015). Our office will keep you posted of developments as tax filing season approaches.

The IRS has cautioned that the longer Congress waits to renew the extenders the greater the likelihood that the start of the 2015 filing season will be delayed. The IRS’s return processing systems are programmed for the current tax laws. The IRS must update its return processing systems for any changes that lawmakers make to the tax laws, such as renewing the extenders. Late legislation in the past has delayed the start of the filing season by around two weeks.

Looking ahead

When the new Congress meets in January, Republicans will have majorities in the House and in the Senate. GOP leaders have started to outline some of their priorities for 2015, including tax-related issues.

Tax reform. Rep. Paul Ryan, R-Wisc., who will serve as chair of the House Ways and Means Committee, has indicated his interest in tax reform, but so far has not provided any details. Ryan’s counterpart in the Senate, Sen. Orrin Hatch, R-Utah, who will serve as chair of the Senate Finance Committee, has also expressed support for tax reform. President Obama repeated his proposal to reduce the corporate tax rate in exchange for the elimination of some unspecified business tax breaks. Whether any tax reform proposals will gain traction in 2015 is unclear.

Affordable Care Act. Shortly after the elections, Hatch said he will propose an alternative to the Affordable Care Act (ACA) as well as bills to repeal parts of the ACA, such as the medical device excise tax. House Speaker John Boehner, R-Ohio, added that the GOP-controlled House will move to repeal the ACA in 2015.

Permanent extenders. Any renewal of the extenders will be temporary, carrying a likely expiration date of December 31, 2015. Lawmakers are expected to take a close look whether to make permanent some of the extenders and allow others to expire after 2015. Good candidates for a permanent extension are the state and local sales tax deduction, the higher education tuition deduction, enhanced small business expensing, and the research tax credit. One drawback, however, is the cost of making these incentives permanent. Many lawmakers will want to offset the cost. Negotiations over the long-term fate of the extenders are likely to be contentious as taxpayers seek to preserve their special tax breaks.

Corporate profits. In 2004, lawmakers agreed to a temporary repatriation tax holiday that allowed businesses to repatriate foreign profits at lower tax levels. Similar legislation is expected to be introduced in the new Congress. Again, negotiations will be intense as some lawmakers would seek to offset the cost of a repatriation tax holiday.

If you have any questions about the lame-duck Congress and the prospect for tax legislation in the new Congress, please contact our office. Keep in mind that as 2014 draws to a close, so does the time in which to make possible tax savings moves. Renewal of some or all of the extenders could impact your year-end tax planning.

If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.
 
 
GrinnanMikeCPA
 
 
 
 
J. Michael Grinnan, CPA.CITP
Certified Public Accountant
9900 Corporate Campus Drive, Suite 3000
Louisville, KY 40223
Office 502-657-6333
Fax 502-657-6334
Email Mike@JMGCPA.com

Real Estate Investors – IRS SLAMMED Again – Great News For Sellers on Short Sales!

Hello and Check This Out!    
Great News for Investors and Sellers FreeGiftComments

I received the article below in an email sent to me from National REIA.

My Short Version Summary of Your Benefits:

1.) Investors who have short saled properties where the lender accepts less than the balance owed, typically had to report the amount of the discount to the IRS as income and pay income tax on the discounted dollar amount. With this new extension, it prevents the IRS from taxing your cancelled debt or the amount of your discount. It appears this expired in 2013; however this new extension act now includes both 2013 and 2014 tax years.
SPECIAL NOTE: If you have short saled any properties in 2013 and 2014, you should verify and make sure your tax preparer knows all of the details on this. I will bet many investor’s tax preparers were aware of the original act, but not this extension.

2.) SELLERS: when buying investment property using “short sale” technique, you have a brand new benefit for your seller. Get it short saled and close before the end of 2014, and they will not get taxed on the amount the lender discounts.  HUGE Benefit for your Seller. Once again, remember your seller might check with tax advisor and they may not be aware of this new extension to the Mortgage Forgiveness Debt Relief Act Extension.

Below is the email I received this morning.

 

Mortgage Forgiveness Debt Relief Act Extension:

Over the course of the first two weeks in July, National REIA’s lobbying arm in Washington, D.C., in concert with National REIA board member and my good friend Tom Zeeb, met with the key sponsors of legislation to extend the short sale tax break retroactively for 2014 and through 2015.

The extension of this tax break, which prevents the IRS from taxing cancelled debt during the utilization of short sales, is critical to restoring the use of short sales.

Since the failure to extend the Mortgage Forgiveness Debt Relief Act into 2014, short sales have fallen dramatically since the passage of the tax break implementation in 2008 to 2013 and through the passage of FHFA’s National Standard Short Sale Program, another product of National REIA’s lobbying arm.

 

What are Your Comments On This New Extension? FreeGiftComments 
(please click on the “Leave Comments” button at top right of this article)

SigMikeButler

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