Tallahassee Real Estate | Real Estate Tallahassee Florida | Homes For Sale Tallahassee
Century 21 Manausa & Associates - Tallahassee Real Estate
One question we get from out of town homebuyers quite often relates to the calculation of property tax in Tallahassee and Leon County, Florida.
Everybody knows that part of being a homeowner includes having to carry your share of the local property tax which supports the city, county, and other public services.
Calculating property tax for the potential purchase of a home for sale in Tallahassee is fairly simple, once you understand all the rules.
There was wonderful news from the legislature this session, as lawmakers approved a bill establishing preeminent universities (again) and support for Florida higher education.
According to an article in the Tallahassee Democrat this past weekend, there will be more than 60 million dollars (collectively) pouring in to FSU, FAMU, and TCC when this bill is signed by the Governor.
It makes me wonder why our elected officials do not push to make Florida Higher Education the top growth industry in Florida.
It appears as if the The Mortgage Forgiveness Debt Relief Act and Debt Cancellation (eliminating the short sale tax) will be extended to January 1, 2014.
Without this extension, any debt relief that a homeowner received from the sale of a principal residence would be taxed as ordinary income, thus the label of “short sale tax.”
If I were to try to ruin the housing market, I wouldn’t need to do too much.
The fastest and easiest method would be to immediately raise mortgage interest rates back to historical norms, as it would push more buyers out the market and bring values down to levels that would set consumer confidence back ten years.
Of course, you could ruin the housing market by changing down payment requirements to 20% of more. This would ensure that only the wealthiest of people could buy homes, and the US homeownership rate would plunge. I suspect land lording would move to large corporations instead of the current “people control” level that we enjoy today.
But there is another way to ruin the housing market, and Congress will soon decide whether or not to pull the trigger.
Today is the day that you can personally assist in the real estate market recovery.
And no, I don’t mean that you have to buy a home today, you can actually choose to help by telling Congress to extend the Mortgage Debt Relief Act Of 2007.
The real estate market recovery is on thin ice, and this issue could very well cause current trends to reverse direction and move to even darker times.
As our federal government continues to flail and waste time disputing who caused the housing market collapse, I just sit here wondering what we’re going to do when Fannie Mae And Freddie Mac finally crash.
Did you happen to catch the Super Bowl this past Sunday? Even if you didn’t, have you participated in our one-question survey about the impact of Super Bowl advertising? Please give us your quick answer by visiting our Super Bowl Advertising Survey (by clicking the link).
A long time buddy of mine send me a link to an article that really summarizes this concern for me. Christopher Whalen wrote a commentary on HousingWire titled On GSE reform: Be Careful What You Wish For that should make all tax-paying US citizens scratch their collective heads. I want to share a few quotes from Mr. Whalen about Fannie Mae And Freddie Mac.
Think about it. These are organizations that are funded by the government, so their accountability for profitability (think survivability if they are private businesses) is very loose. Who needs to profit when the government is backing you. So what motivates the GSEs (Government Sponsored Enterprises) if not sound financial decision making? Mr. Whalen points out:
… the close operational integration of the top four banks and the GSEs, including Fannie Mae And Freddie Mac and the Federal Home Loan Banks, which are the largest GSEs of all. You cannot separate the GSEs from JPMorgan Chase, Citigroup, Wells Fargo and Bank of America — the four horsemen of the financial apocalypse that exercise illegal cartel control over the secondary market for residential mortgages. The big four zombie banks run the GSEs in the same way that they exercise control over special purposes entities and the private mortgage insurers.
The road to hell is said to be paved with good intentions, and Fannie Mae And Freddie Mac were established with good intentions in mind. But they have evolved to a cancer that is killing housing, and I believe is holding back the economy. Mark Calabria of the CATO Institute notes:
“By focusing on ‘the role of government’ in housing, [Nocera] moves the debate away from the reckless immoral behavior of Fannie Mae And Freddie Mac. He can claim this is about social policy and paint himself as a caring progressive, despite the massive regressive theft that Fannie Mae And Freddie Mac have actually been.”
Everybody knows that Fannie Mae and Freddie Mac have been hammered. Nobody argues that they are a viable, economic entity. But did you know that the reality of their financial situations is far worse than what most are reporting? On this, Mr. Whalen observes:
In the case of the GSEs, the loss on a bad loan is not recognized until the underlying collateral is sold — meaning that there are tens if not hundreds of billions of losses embedded on the balance sheets of Fannie Mae and Freddie Mac in the form of bad loans
What is going to happen when the proverbial s#*t hits the fan? If hundreds of billions of loans go bad, will our banking system survive? Or will the next administration (we know Obama is going to continue to ignore this through elections) decide to bail out the banks by printing another trillion dollars?
I know there are “way smarter” people out there who pay attention to this, I’ll be looking for their thoughts and ideas. I can promise you this, the lack of leadership in Washington today might be causing a problem that could collapse our economy. It has happened elsewhere. Are we just a “Super-sized” Greece?
If we do not put some bright, non-politically charged minds, on the task of reforming and dissolving Fannie Mae And Freddie Mac, then what we know of the housing market collapse will pale in comparison to what is ahead.
I have had quite a few conversations lately about the capital gains tax that results from a short sale or foreclosure, and what exactly what you should do when the lender sends you an IRS Form 1099-C.
First of all, as a quick disclosure to first-time readers …
OK, my “I’m not a Tallahassee accountant” disclosure is out of the way, let’s get back to the topic at hand regarding IRS Form 1099-C.
Recently, a long-time reader asked “why did I get a IRS Form 1099-C from the lender, and what does the amount on the form represent?”
I gave him my “I’m not a Tallahassee accountant disclosure” and explained that the Form 1099-C is sent by the lender as a “forgiveness of debt.” The following comes from the language right on the form:
You received this form because a Federal Government agency or an applicable financial entity (a lender) has discharged (canceled or forgiven) a debt you owed, or because an identifiable event has occurred that either is or is deemed to be a discharge of a debt of $600 or more. If a creditor has discharged a debt you owed, you are required to include the discharged amount in your income, even if it is less than $600, on the “Other income” line of your Form 1040. However, you may not have to include all of the canceled debt in your income. There are exceptions and exclusions, such as bankruptcy and insolvency.
Basically, the way I understand it is the IRS Form 1099-C has one of two purposes for a real estate investor who disposes of a distressed property:
Here’s two additional questions to ask your Accountant:
I hope this helps clear-up what to do (tax wise) after you dispose of an investment property through short sale, deed-in-lieu, or foreclosure. If you have any additional questions or comments about the IRS Form 1099-C, post them below in the comments section and I will reach out to some Tallahassee accountants to chime in for the right answers.
There was an article in yesterday’s New York Times that explained the new mortgage relief plan, which is due to be signed today, is very close to completion.
Like so many articles that have been written about the housing market crisis, this one liberally showed how all the victims will receive assistance.
In case you do not remember, the victims of this are the homeowners who have or will lose their homes to foreclosure due to their failure to make the payments on the loan.
They are victims because the banks wrongfully forged documents to make the foreclosures happen.
Now I certainly understand why the Feds want to go after and punish the banks for forgery, but I’m having a problem labeling the homeowners as “victims” of this crime.
Have their been any cases reported where banks forged documents to foreclose on anybody who was “current” on their loan?
Everybody is lining up to take shots at these banks as if they were attacking performing loans. These are loans that are in default!
You are not going to fix the housing market by handing out money to people who are not making their mortgage payments. But apparently, the Obama Administration sees otherwise:
“This will be one of the most significant steps in the recovery of homeowners, neighborhoods and the broader housing market from the worst collapse since the Depression.” – Shaun Donovan, the Secretary of Housing and Urban Development
This makes me sick.
Let’s not confuse two very separate issues that are really at play here.
Maybe I’m reading this wrong, but I have yet to hear stories from the “robo-signing” scandal where people were wrongfully foreclosed upon.
These lenders (or their legal representatives) created documents to show they owned the loans (meaning so they could have the legal right to foreclose). Again, have the FBI throw the wrong-doers into jail for loan fraud.
But why take money from the shareholders of these banks and give it to people who were in default of their loans? Is this really justice for anybody, or just a re-distribution of wealth?
Unless I completely missed the boat on this, I would think that this mortgage relief plan is as fraudulent as the methods the banks used to foreclose on the loans in question.
The comment from the Secretary of Hud is an insult to the intelligence of the American people. The US mortgage market exposure far exceeds a trillion dollars, giving handouts of $18B to $25B to a small fraction of the market is not going to have an impact.
Think I’m wrong? I said the same thing about the Homebuyer Tax Credit when it was first envisioned several years ago. The Tallahassee housing market (as well as the US housing market) has since returned to pre-tax credit levels, and the US government is going to receive less revenues from taxes for the coming few years.
Keep the government out of the housing market recovery. The mortgage relief plan is a terrible mistake that is a clear re-distribution of wealth (which I guess is Obama delivering on his campaign promises).
Have you recently received a letter from the Leon County Tax Collector, advising you to pay a Florida Tourist Development Tax?
If you are a real estate investor in Florida, and you own residential investment properties, you should be aware of this tax.
Fortunately, the tourist development tax only applies to the rental of living quarters or accommodations for a term of six months or less, and thus has been nicknamed the “bed tax.”
I received an email yesterday from a long-time friend and client who wrote:
Joe, I got a letter from the Leon County Tax Collector this weekend. The topic was Tourist Development Tax Registration. I have attached the document, but I think the basic message is that Florida taxes revenue from rental properties and I may need to register… JB
The document that was attached to the letter explained:
Pursuant to sections 125.1014 and 212, Florida Statutes, Tourist Development tax is to be charged by owners and operators of facilities on the revenue of their rentals that are for a term of six months or less.So how do you know if it applies to you?
This is very simple. If you ever lease a property for six months or less, you need to register to pay this tax.
My friend owns rental properties in Leon County, but his are long-term rentals that go for periods of one year or longer. He does not have to pay the tourist development tax.
If you own Florida residential investment properties and have a property manager who handles the leasing and management, then there will be times when somebody is going to want a six month lease and you will be in a position to want to accept it. Here’s what you do.
Have your property manager execute a one-year lease, allowing for the tenant to terminate early after the sixth month. Give the tenant the right to terminate prior to the end of the leasing period, providing the tenant gives written notice of the intent to terminate 30 days prior to the termination date.
This will ensure that you go beyond the six month point and not be subject to the tourist development tax.
If you are unsure as to whether you need to register and/or pay the tourist development tax, you can contact the Leon County Tax Collector’s office at (850) 488-4735.
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