THE MONARCH NEWS CARRIER For the Serious Real Estate Professional Volume XII
Fall 2012
Monarch Title is now offering the new Virginia OneTime Mandatory 3Hour Residential Standard Agency Class. See page 3 for details.
“THE AFFORDABLE CARE ACT” AND THE NEW REAL ESTATE-RELATED 3.8% TAX NOT AS ONEROUS AS INITIALLY BELIEVED The highly controversial Health Care and Education Reconciliation Act of 2010 (also known as the “Affordable Care Act” or “Obamacare”) included in its 2,000+ pages, at least one new way to help fund Medicare: a 3.8% tax on investment income including especially net income from rentals. At first blush, the new tax appeared to present a potentially heavy burden, in part because it was understood to apply to ALL real estate transfers. NOT SO! The good news is that the tax will not affect an individual whose adjusted gross income (AGI) is $200,000 or less or a couple with an adjusted gross income of $250,000 or less. Moreover, this is NOT a transfer tax such as that levied on the sale/purchase of real estate. It is charged on some capital gains from the sale of real estate meeting certain criteria, and again, only where the seller has an adjusted gross income of $200,000 or more (if filing single) or $250,000 if filing jointly. Other points about the new tax: !""#$"%&'()*"()"+,)-,./"0123"%-$"45)6$"%&",**&**,%7&""" until taxes are filed in 2014. !""#)"5.8&."95."$:(*"$,;"$5",<<7/="5)&">-*$")5$"5)7/"" meet the income requirements stated above but also will not apply if none of your income is from capital gains, rents, interest or dividends. !" ?:&"'&)&.,7"95.>-7,"95.",<<7(@,$(5)"59"$:&"3ABC"$,;"" is: Only the income which exceeds the $200,000 or the $250,000 AGI will be subject to the tax provided the income otherwise qualifies (e.g., single taxpayer has AGI of $210,000 and some of the income comes from dividends and net rentsonly the amount above the $200,000 –or $10,000, will be subject to the 3.8%). The Monarch News Carrier Volume XII Fall 2012
D&.&6*",)"&;,><7&"59":54"$:&"$,;"45-78"%&",<<7(&8"()" a real world scenario:
Bob has a regular salaried job where he makes $90,000 per year. He also rents out three houses where his net rental income (after expenses) is $20,000. Thus his total AGI is $110,000. Since his income from all sources, including net rents, does not exceed $200,000, the 3.8% tax would not apply.
HOWEVER—if he rented out 30 properties and had a net rental income of $120,000—plus his salary of $90,000, for a total AGI of $210,000, he would be taxed on the $10,000 or the amount over the $200,000.
The National Association of REALTORS® advises that it argued vigorously against the addition of this tax to the Health Care Act and remains hopeful that it may ultimately be repealed. In the interim, REALTORS® should recall that they are not expected to be their @7(&)$*6"EFG*"5."$,;",$$5.)&/*A"G)8",7$:5-':" REALTORS® can and should “issuespot” with/for their clients, when any tax questions are raised, especially those which might be as complicated as the new 3.8%, they should always refer their clients to the appropriate licensed professionals. For more indepth information about the new 3.8% tax, go to: http://www.realtor.org/small_business_health_coverage.nsf http://www.realtor.org/articles/38taxwillgointoeffectin2013 http://www.ksefocus.com/billdatabase/clientfiles/172/8/1437.pdf
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SEPTEMBER IS REALTOR® SAFETY MONTH! Safety is an everpresent issue for REALTORS® and should always be at the back of every REALTOR®’s mind. The sheer demands of the business alone requiring agents to show up at different properties (many times alone to meet people who are many times not known to the agent) are cause for vigilant safety precau tions. Moreover, as marketing demands for REALTORS® have increased requiring most agents to have their own websites complete with their pictures/photographs, makes it all the easier for stalking to take place. In short, selling real estate has never been easy but it’s also increasingly dangerous. Here are some reminder tips: " "
!" H&I&.">&&$",)"-)J)54)"<.5*<&@$",$","I,@,)$"<.5<&.$/A"#9"/5-"9&&7"/5-">-*$">&&$"$:(*"<.5*<&@$=",$"" least take someone with you and make sure someone at your office (or home) knows where you are going and what time you should return. !""#9"/5-".&@&(I&":,.,**()'"5."$:.&,$&)()'"<:5)&"@,77*=".&<5.$"*-@:",@$(I($/"(>>&8(,$&7/"$5"/5-.">,),'&.A"" Also, after identifying a particular phone number or caller as the “harasser” don’t continue to take the calls as such only encourages their behavior. Instead, let them go to voice mail. If you don’t have caller ID on the phone on which they call you, consider getting it so you can screen the calls. If the harassment doesn’t stop, you and your manager may wish to ask the phone company to run a trace on the caller. You’ll need to report same to the local authorities as well.
K5.">5.&"&;@&77&)$",.$(@7&*",)8"$(<*"5)"*,9&$/="@:&@J"5-$"HGL6*"LMGN?OLP"K(&78"Q-(8&"5)"R,9&$/",$ http://www.realtor.org/fieldguides/fieldguidetorealtorsafety
REALTOR® REMINDERS: As obvious as it seems, one key point to keep in mind when working up a transaction and contract: WM"RXLM"GNN"FMOFNM"DGU#HQ"GH"#H?MLMR?"#H"?DM"FLOFML?Y"R#QH"?DM"EOH?LGE?Z"G"@75*&"*&@5)8"(*"$5" be sure to have the person(s) having authority to sign the contract sign it. Recall that a contract is unenforceable if all parties having an interest and/or the persons having authority sign do not sign it. If you’re not sure who should sign your listing agreement and/or sales contract, check with your local title attorney. You may need a period of ownership title search run. It may seem like too many extra steps but it will give you some idea what you’re working with, and preferably before you invest too much time in a matter.
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PROFESSIONAL DEVELOPMENT FORUM
is pleased to announce our newest Continuing Education Program:
“WHAT’S IT ALL ABOUT? THE IMPORTANCE OF CLEAR TITLE, TITLE INSURANCE, SURVEYS AND UNEVENTFUL SETTLEMENTS” A 2hour CE program (approved for DC and VA credit) addressing the most common practical and legal concerns relative to clear title, how to correct defects, the purpose of title insurance and its realworld uses, the indispensable need for surveys; and some nuts and bolts about ways to ensure smooth closings and some suggestions for ways to fix last minute transactional problems.
The Virginia OneTime Mandatory 3Hour Residential Standard Agency Program
ATTENTION ALL VIRGINIA LICENSEES: You MUST complete this new agency program within the next 2 year cycle of your licensure. These new laws and practices relative to buyer agency and dual agency are effective July 1, 2012. This Virginia RSA program was developed by the Virginia Association of REALTORS® and is approved by VREB/DPOR. The program reviews the history of agency in Virginia including its varying forms: standard, limited service and dual. It also addresses nonagency known as independent contractor. We will be pleased to bring a class to your firm. For more information, contact Ann Johnston at ann@monarchtitle.net.
See our other 2-HR CE programs below all approved for DC and VA CE Credit: Staying Out of REALTOR® Jail: Avoiding the Most Common (& Costly) REALTOR® Errors This best practices program draws its material from real world litigation, claims and disciplinary actions against REALTORS® in the Metro DC area and other areas. By learning from those errors which generate the greatest number of claims against REALTORS®, it is hoped that real estate sales professionals can improve their own practice to build a better business and avoid claims. This program includes an indepth analysis of the applicable laws and ethics relative to “real world” cases with a view to directing the real estate professional towards better practice.
Buyer Agents as Heroes: Better Serving Your Buyer Clients Also a best practices program with a strong focus on the legal/ethical/practical duties of buyer agents with the ultimate goal being to provide better service to buyer clients. Tips for better buyer agency practice are included with discussions about better managing clients, providing them full, reliable service and deftly working out those problems which consistently emerge.
REALTORS® Are the Economic Recovery Army: REALTORS® Start Marching! A review of the history of REALTORS®’ and their involvement in building, developing and nurturing the housing industry from 1908 through the Great Depression. Aside from having a history to be proud of, REALTORS® can learn from past efforts to restore the housing industry and economy. With that history as a back drop, the program focuses on several areas of the distressed property market which continue to be lucrative for those REALTORS® willing to specialize and help the economic recovery.
The Risky Business of Real Estate Sales: Dicey Disclosures and Mortgage Fraud
This program entails an indepth discussion of a wide range of disclosure issues including an analysis of what constitutes a material adverse fact; and what, whether and how other facts should be disclosed and why. Through the application of laws, ethics and business considerations to real world examples, students will gain a better understanding of how to manage disclosure issues effectively. Additionally, the program reviews mortgage fraud issues in the Metro DC area including a discussion of red flags and practices to watch out for. It’s an interesting area with information from the FBI’s vast resources on mortgage fraud activities, scenarios and recent statistics. The Monarch News Carrier Volume XII Fall 2012
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For the best settlement services in the Metro DC area, contact our real estate professionals at any one of our convenient locations: McLean, Virginia 6861 Elm Street, Suite 100 McLean, VA 22101 703.852.1730 703.852.1750 Fax
Dulles / Herndon, Virginia 205 Van Buren Street, Suite 215 Herndon, VA 20170 703.890.0820 703.890.0830 Fax
Friendship Heights, Washington, DC (Also serving Maryland) 5151 Wisconsin Avenue, NW, Suite 350 Washington, DC 20016 202.298.6270 202.298.6275 Fax
Leesburg, Virginia 602 South King Street, Suite 200 Leesburg, VA 20175 703.771.0000 703.890.0830 Fax
Old Town Alexandria, Virginia 675 North Washington Street, Suite 435 Alexandria, VA 22314 703.852.7700 703.852.7719 Fax Capitol Hill at Eastern Market, DC (Also serving Maryland) 210 7th Street, SE, Suite 100 Washington, DC 20003 202.546.3100 202.546.3101 Fax
Gainesville, Virginia 14540 John Marshall Highway, Suite 208 Gainesville, VA 20155 703.753.0771 703.581.1310 Fax Springfield, Virginia 6800 Backlick Road, Suite 303 Springfield, VA 22150 703.852.7710 703.852.7717 Fax
For more information about all of our real estate services, visit our website at: www.monarchtitle.net
The Monarch News Carrier Volume XII Fall 2012
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