Under current law, the carried interests (or profits interests) of general partners in real estate partnerships are taxed at capital gains rates (currently 15%) when the property is sold. In 2008 and 2009, the House passed legislation that changed the rule so that carried interests in real estate partnerships (and many other investment arrangements, as well), would be taxed as ordinary income. This provision has been very controversial. Until last week, the Senate had been unwilling to adopt this far-reaching legislation. Now, the chairs of the tax-writing committees have agreed that carried interest will be among the provisions used to “pay for” a very large package that will extend expired tax provisions and various spending programs, as well.

Under the compromise, a portion of the amount realized from a carried interest will be taxed as ordinary income and the remainder will be taxed as capital gains income. During 2010, 2011 and 2012, 50% of the income will be taxed at ordinary rates and 50% will be taxed at capital gains rates. Beginning in 2013, 75% of the carried interest income will be taxed as ordinary income and 25% taxed as capital gains. Assuming that the Bush tax cuts expire for upper income individuals, this would mean that, by 2013, the highest tax rate on carried interests would be 35%. Note that general partners who have invested their own capital in a real estate partnership will not be affected by this change.

The carried interest provision is part of H.R. 4213, a package that would renew and extend many expired tax provisions through December 31, 2010 and that would also extend spending programs including unemployment insurance benefits and various Medicare payment structures. The House had been scheduled to vote on the measure May 21, with the Senate following the week of May 24. The House did not conduct that vote, however, so the timing has slipped. It is not known if the legislation can clear both bodies before the Memorial Day break.

For more information:
Kevin Jones Real Estate & Loans
818-955-SOLD (7653)

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Burbank 4 Units For Sale!

Prime Location near the Equestrian Center!

Updated and Upgraded … Even Central Air and Heat!

Call Today for more info:  Kevin Jones 818-955-SOLD (7653)

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Some buyers may rush to take advantage of the Federal Tax Credit

This could be as much as $8,000

Which need to be inked by April 30, 2010

These closings have to happen no later than June 30, 2010

The California Tax Credit covers closings on existing or new homes on or after May 1, 2010

So it looks like we have approximately a 60 day window …

Take advantage of this great opportunity today

Call Kevin Jones 818-955-7653 and lets get you up to $18,000!
KEVIN JONES Real Estate & Loans

info taken from original article:
http://blogs.wsj.com/developments/2010/03/24/californias-tax-credit-will-home-buyers-stampede-for-18000/

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You’ve decided to purchase a home and take advantage of the Extended Home Buyer Tax Credit. Here’s what you have to do to get your benefit:

1. Close on your home purchase between November 7, 2009 and April 30, 2010, or have a binding written contract in place by April 30, 2010 with a closing date no later than June 30, 2010.
2. Decide whether to:
* apply the credit to your 2009 tax return, filed on or before April 15, 2010;
* file an amended 2009 return; or,
* apply the credit on your 2010 return, filed on or before April 15, 2011.
3. Attach documentation of purchase to your return.

Documentation of Purchase

Details concerning the precise documents required to confirm your purchase have not yet been released. When this information becomes available, we will include instructions and links to the appropriate forms.

When to Apply the Credit

Buyers purchasing homes on or before December 31, 2009 may claim the credit on their 2009 tax returns.

Buyers purchasing in 2010 will have the option to:

* Claim the credit on their 2009 return, even if the purchase is completed after December 31, 2009;
* File an amended return for 2009 if their purchase is completed after April 15, 2010; or,
* Claim the credit on their 2010 tax returns.

If you, or your client, purchased a home between January 1, 2009 and November 6, 2009, please see: How to Get the 2009 First-Time Home Buyer Tax Credit.

Applying the Credit to Your 2009 Taxes

You will need to do three things to claim the credit on your 2009 tax return:

1. Fill out Form 5405 to determine the amount of your available credit;
2. Apply the credit when you file your 2009 tax return or file an amended return;
3. Attach documentation of purchase to your return or amended return.

Applying the Home Buyer Tax Credit to Your 2009 Tax Return

Original Article Taken from:
http://www.realtor.org/home_buyers_and_sellers/extended_home_buyer_tax_credit_how_to

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I am the biggest advocate of persistence!  When is it too much?  Can you Actually be a pest? Or cross the line in your Agency?  Even become Unethical?

Here’s a brief of an ordeal we went through yesterday … Listing was in multiple offers and gave 72 hours for best and finals. Cutoff was 10:00am, at 10:05am I received a phone call from well let’s call her Tiffany from Diamond Bar.  No hello how are you doing, this is Tiffany did we get the deal … Did we get the deal? Talking a mile minute!  I explained that I was going to prepare the offers for presentation at 2pm today and that the Seller will choose the offer that they want to.  Then she asked if they are the highest offer,  If not we can raise it, they can change it, we will do whatever it takes to get this deal, so are we the highest bidder, are we, are we?  All in one breath!

I explained to her that she had a good offer and that her offer was near the top … without finishing my sentence, ok, ok, I will get it changed, what should I write, what will it take to get the deal, how much more do I need to raise the offer, we will do anything just tell me what it will take … well … you get the picture … I love her energy and persistence … but I explained to her that the deadline was 10:00am and that I was preparing the offers for presentation and that I was leaving the office in just a few minutes and would not be returning until after the presentation and that she had 72 hours to submit her best and final offer.

So I arrive at the house a few moments after 2:00pm (Yes, I was late to my appointment … shame on me) and there is a couple standing outside the property.  Hmmm … maybe a Realtor is going to show the property?  Didn’t think much of it and proceeded to go inside.  We waited for a few moments for the daughter to arrive as she was to be included in the presentation.  We begin the presentation of  the seven (7) offers we had received.  A few minutes later at approximately 2:15pm the sellers phone rings, the wife Karen answers the phone and is in the kitchen for several minutes just listening to the phone.  The husband Jerry is getting upset that the wife is interrupting the presentation.  Jerry tells Karen, if it is not about this deal to hang up the phone, the Karen walks over and tells the person here is my husband.

Then the Jerry is on the phone for a good couple of minutes and finally he says, my Realtor is right here do you want to talk to him?  Now my curiosity it peaked!  Another almost minute goes by and he says, here I think you need to talk to my Realtor.  Jerry hands me the phone shaking his head. 

I say “Hello” …  it’s Tiffany, my buyers are outside, they want the deal, they will do whatever it  takes to get the deal, what can we do to get this house for my buyers, did we get the deal, did we get the deal … blah blah blah … a mile a minute … in pure desperation!  Then she says I will be right over … I tell her that it is in appropriate for the buyers to be here without an appointment and even more appropriate for her to come over other than to tell  her buyers to leave.  OK, OK I will do that, I will ask them to leave.

At 2:20pm my phone begins to ring like crazy I have to turn it off.  We proceed and go through each offer.  It has been 19 years since Jerry and Karen have sold a property, they have several questions about the contracts, the process, what the fees are, what their net is on each deal, etc.  Jerry looks for his mortgage statement and we proceed to finalize his net figures as this is a part of their retirement income!

We finally are down to two offers.  One at $426,000 with $300,000 down (Tiffany’s offer) and another at $430,000 with 20% down.  The Sellers ask me if it is worth the extra $4,000 for the risk, so I explain the various different scenarios and they are discussing it amongst themselves.  Jerry explains that it makes more sense that the larger down payment is the better way to go.

And this is the turn of events where Persistence can become a Nuisance … Karen says, look, the agent and the buyers are standing on the front porch!  Jerry says, if they knock that will be it … I don’t want to deal with someone that is going to constantly bother me!  Tiffany knocks, I look around, it is dead silent in the house, you could hear a pin drop!  Everyone is sitting there with a very shocked look on their face!

Jerry said this agent is going to give me a heart attack, he turned to me and asked, would you please go out there and tell them that I don’t want to deal with them because this is just plain annoying!  So I go outside and ask Tiffany what she is doing here without an appointment? We really have to have this deal we are willing to do anything … blah blah blah … I tell her that this is completely inappropriate and please leave, thinking that I possibly could save her deal.

Here, here is a cake for the sellers … now it has escalated to Bribery!  She is trying to force me to give this cake to the sellers … Karen is Diabetic and can’t have sweets.  ( I was thinking Flowers would have been better … just kidding!)  Anyways she won’t leave, I then tell her what she is doing is inappropriate and is unethical in her approach to capture this deal. I ask politely several times, she still won’t leave, so then I tell her what Jerry told me to tell her, which I did not want to embarrass her in front of her buyers.   I explain that she is costing the buyers the deal.  Still won’t leave!  So, in a very firm voice,  I turn to the Buyers and tell them … Your agent just cost you the deal … You need to leave now … go on.  They just stood there.  Leave Now!  I felt so bad, but what do you do?

The Sellers really wanted to take her deal … if Tiffany would have just left things alone, hands down she would have had the deal.  Business wise it made all the sense in the world to take a 70% down deal … wasn’t worth the risk over $4,000 extra profit they said … but the aggravation and stress that this agent would cause is not worth their health.

Lesson … be Persistent … but don’t be a Pest!

Here is Tiffany’s email this morning:

Dear Mr. Jones:

      When I received you message yesterday, I finally realized the reason that you are mad.  You think “I across over your agency and talk to seller directly!!”   No, It is not true!!   Please check the message I left yesterday afternoon one more time.  I said, my buyer is outside of the property and trying to meet with seller and she wants to see the property again.  I was trying to ask your help to stop them from doing something unappropriated.    You didn’t pick up the phone.  Then I called seller.  Please ask your sellers, did I said anything to negotiate the price?  I wouldn’t so stupid to do that while you were there with sellers!!  I was just trying introduce myself.  I said, I am the agent from the buyer who made the offer for $426,000.  I talked to Karen this way.  Then she passed the phone to Jerry.  I though it is you. I called your name.  He answered” no, this is Jerry.”  Then, I introduce myself again the same way.  He said, “you want to talk to Kevin.”  I said, “yes”!!  After that, you picked up the phone and very angry.   I wasn’t trying to do anything to negotiate the price with seller without you.  When I said sorry, I am sorry for interrupting your presentation and bothering the seller.  Now, I feel sorry because the misunderstanding among us, I let my buyer lost the chance to get the house.   I would do anything to help my buyer to get your seller’s house back.  Please think it over, you will know for fact for what happen yesterday and what I said is true.  I know it might be too late to said so.  But if the current buyer back out or the escrow didn’t go through for any reason , please please re-consider about my buyer’s offer.

Sincerely,  Tiffany

Here is my response:

Tiffany,

Thank you for your offer and we appreciate all of your hard work.  First off I am not mad or angry with you or the situation.  This is business, I have no emotion to my business or the people in it. 

The key here where I feel you crossed the line is yes calling the Sellers directly, this is why we have Agency relationships to establish boundaries.  If you call the listing agent and they don’t pick up the phone wait for a call back.  You knew that I was presenting offers and that was not an appropriate time.

The Sellers side of the story is different regarding your telephone call while we were presenting offers. The Sellers, both Karen and Jerry both state that you were adamant on them accepting your deal.  This type of pressure, persuasion and just having contact with them is inappropriate action on your part.

It was completely inappropriate first to call the sellers during the presentation and then to knock on the door just minutes after I asked you to ONLY come to the property to remove your buyers.  On top of that, to bring gifts (Cake) and try to Bribe the Sellers is completely inappropriate.

Hopefully this will be a valuable lesson to you in your business.  If you would have just let the deal progress you would have been the winner.  But the Sellers based their decision on a less desirable offer because they did not want the stress involved in the process that you brought to the table.

Actually they were about a minute away from signing off on your deal when you knocked on the door! 

I am putting you on notice not to contact the Sellers again, the property is reported “Pending” and you have no reason to contact them directly.  If you have a question regarding this property all communication must go through the Listing Agency.  Any attempts will be dealt with through legal action as per the Sellers request.

Any questions or concerns please contact me immediately.

The Saga intensifies!

I decide to call Tiffany’s Broker after her email this morning to snub off any possible Legal issues that could possibly arise!  When I went to do this … I notice her broker is out of the San Francisco area  (Northern California) … unusual for a Southern California agent.  I follow up on her license and it appears that she is current on the DRE site as a Broker.

Finally I track down the Broker of the company Tiffany filled in on the offer form.  The Brokers name is Shelly.  Shelly  lets me know that Tiffany does not work for her!  Hmmm … this is interesting!  Shelly is an Independent Agent/Company with no one working under her!

So I cal CAR Legal Hotline and they advise me that Tiffany is not a “Realtor” so she doesn’t belong to a board … how she is getting her MLS access I do not know.  Well maybe I figured it out … there is a different name on the Winforms! 

You would think that if you were doing things that could be possibly not so Kosher, no pun intended being Passover, that you would want to fly under the radar!

My  Valuable  Lesson:

I will never tell another Agent what time I am presenting offers!

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Are you over your head?

Mortgage larger than what your home is worth?

There is hope!

Here is a Brief Article about short Sales: CLICK HERE FOR ARTICLE

It basically explains that you can sell your home.

Even if you have negative equity in most circumstances.

Call Today for a Confidential and Private consultation.

It doesn’t cost anything for our appointment!

But it could be very valuable to you!

Kevin Jones
818-955-SOLD (7653)

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As many people are selling their homes short or also known as a “Short Sale” they are not aware of consequences or remedies that may be available to them. You need to educate yourself and be aware of all the pro’s and cons of a short sale.

Here is the original link to the entire article from the Los Angeles Times dated March 14, 2010

IRS tells homeowners how to get tax relief if a lender forgives part of their debt reduction of mortgage principal, usually considered taxable income … By Kenneth R. Harney

The IRS gets involved in mortgage principal write-downs because the federal tax code generally treats any forgiveness of debt by a creditor in excess of $600 as ordinary taxable income to the recipient. However, under legislation that took effect in 2007, certain home mortgage debt cancellations — such as through loan modifications, short sales or foreclosures — may be exempted from tax treatment as income.

One of the largest servicers of subprime home loans, Ocwen Financial Services President Ron Faris testified to a congressional subcommittee this month that borrowers with negative equity were as much as twice as likely to re-default after a standard payment-reduction loan modification than those who receive partial forgiveness on their principal debt.

But what are the tax implications when your lender essentially says: OK, we recognize that you’re underwater, maybe you’re thinking about walking away, and we’re going to write off some of what you owe to keep you in the house?

IRS guidance issued March 4 spelled out step by step how financially troubled and underwater borrowers can qualify for tax relief when a lender agrees to lower their debt. Here are the basics, should you be considering a short sale or loan modification involving principal reduction.

First, be aware that the federal tax exclusion only applies to mortgage balances on your principal residence — your main home — and not on second homes, rental real estate or business property. The maximum amount of forgiven debt eligible under the law is $2 million for married taxpayers filing jointly and $1 million for single filers.

But there are some potential snares: Your debt reduction can only be for loan amounts that you’ve used to “buy, build or substantially improve your principal residence.” This includes refinancings that increased your total mortgage debt attributable to renovations and capital improvements of your house. But if you used the proceeds for other personal purposes, such as to pay off credit card bills, buy cars or invest in stocks, the mortgage debt attributable to those expenditures is not eligible for tax exclusion.

When your lender forgives all or part of your mortgage balance, the lender is required by law to issue you an IRS Form 1099-C, a “Cancellation of Debt” notice, which is also sent to the IRS. The form shows not only the amount of debt discharged but the estimated fair market value of the house securing the debt as well.

A few other noteworthy features of the IRS rules: If you’ve been foreclosed upon or you do a short sale and lose money in the process, don’t claim a tax loss on your federal filing. The IRS will turn you down. However, if you go to foreclosure and your lender agrees to cancel all or part of the unpaid mortgage balance as part of the deal, then you can file for an exemption from the IRS.

What if your lender reduces the debt on your house but you continue to own the property and live in it? There’s a tax wrinkle in the fine print: The IRS will require you to reduce your “basis” in the house — your “cost” for tax purposes — by the amount of the forgiven debt. But that’s not likely to be a big concern for most homeowners digging their way out.

Finally, if you want to claim the debt-forgiveness exemption, download IRS Form 982 at www.irs.gov and attach it to your return for the year in which the debt was forgiven. And don’t assume that this tax code benefit to homeowners will be around forever. It expires at the end of 2012.

NEED TO SELL YOUR HOME?
But owe more than what it is worth?

Call KEVIN JONES Real Estate & Loans today 818-955-SOLD (7653)
for a confidential consultation today at no charge!

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Undisclosed payments in short sale transactions, especially those paid outside of escrow, may violate the law, including RESPA, laws against loan fraud, and licensing laws. Short sale agents have increasingly reported to C.A.R. about requests for agents and their clients to pay junior lienholders and others, oftentimes outside of escrow.

One common scenario is when a short sale seller’s senior lender authorizes a payment of $3,000, for example, to extinguish a junior lien, but the junior lender demands that the buyer pays an additional $9,000 outside of escrow. Not only would it be risky for a buyer to pay outside of escrow, but concealing this additional payment from a federally-insured senior lender may constitute loan fraud, which is a crime punishable by 30 years imprisonment plus a $1 million fine (18 U.S.C. section 1014). Furthermore, omitting from the HUD-1 Statement any charges paid at settlement by either a buyer or seller may violate the Real Estate Settlement Procedures Act (RESPA) (Appendix A to 24 C.F.R. Part 3500). Depending on the specific circumstances, carrying out these payment requests may also violate other laws and regulations, and an agent’s participation in the scheme may be subject to license revocation by the Department of Real Estate or other disciplinary action.

Agents and their clients are encouraged to file any complaints regarding fraudulent activities to the proper authorities, including the following agencies:

• Attorney General’s Office
California Department of Justice
800-952-5225 Phone
http://ag.ca.gov/consumers/mailform.htm

• Department of Housing and Urban Development (HUD)
HUD Office of Inspector General Hotline (GFI)
800-347-3735 Phone
http://www.hud.gov/offices/oig/hotline

• Federal Bureau of Investigation (FBI)
202-324-3000 Phone
https://tips.fbi.gov

KEVIN JONES Real Estate & Loans
818-955-SOLD (7653)

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Should we really sell our State owned buildings and now pay rent?

The listing agent stated that interest is coming in from all around the world!

See the complete article here:

http://www.latimes.com/business/la-fi-state-offices08-2010mar08,0,565757.story

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This is an update on what is going on in our local area as many are not aware that even the local malls are in trouble. General Growth owns both the Glendale Galleria, the Burbank Town Center and also Northridge Fashion Square.

New York City’s Vornado Realty Trust has entered the picture as a possible third suitor for General Growth Properties Inc.

According to The New York Post, Vornado is mulling over a bid for all or part of the Chicago-based bankrupt mall operator, which owns the Glendale Galleria, Burbank Town Center, Fallbrook Center and Northridge Fashion Center.

A potential bid from Vornado, a real estate investment trust with more than 100 million square feet in its office and retail portfolio, including Chicago’s 4.5 million-square-foot Merchandise Mart, comes after General Growth announced a plan last week to split into two companies with Brookfield Asset Management, of Toronto, as a major investor.

General Growth’s reorganization plan was an attempt to fight an unsolicited $10 billion takeover offer from the Simon Property Group Inc., in Indianapolis.

The Post reports that Simon Property Group reconfirmed its interest in purchasing General Growth Properties Inc. March 2 despite General Growth’s announcement that it has reached a $2.6 billion equity deal with Brookfield Asset Management Inc.

If approved by a bankruptcy court judge, the deal announced March 2 by General Growth will allow the company to exit Chapter 11 bankruptcy protection and possibly avoid being taken over.

Under the terms of the agreement, Brookfield Asset Management would take a 30 percent stake in General Growth and give it enough cash to remain in business while it raises $5.8 billion by selling assets and issuing new equity.

For each share of General Growth owned, the company’s shareholders would receive one share of new General Growth common stock with an initial value of $10 per share, plus one share of General Growth Opportunities — a new company that would own certain assets, such as General Growth’s master-planned communities — with an initial value of $5 per share.

In a statement issued March 2, executives with Simon Properties consider the deal between General Growth and Brookfield “inferior and highly conditional.”

Last week, Simon, which owns Del Amo Fashion Center in Torrance among its retail portfolio, offered General Growth $10 billion, including $9 billion in cash. A total of $7 billion would have gone to creditors and $3 billion to shareholders.

General Growth filed for protection under Chapter 11 of the U.S. Bankruptcy Code in April 2009. In December, it won court approval to restructure about $10.25 billion of its debt on 103 of its 200 properties.

Portions were taken from Loopnet on Mar 3, 2010 which appears they got info from the Los Angeles Business from bizjournals - Interest in Glendale Galleria Owner, GG

For more information on Local Real Estate, whether it is Residential, Investment or Commercial property call Kevin Jones today 818-955-SOLD (7653)

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