in Blog , Current Topics , Newsletter by Secure Investments

Real Estate Tax Changes and COVID Relief : What You Need to Know

On Wednesday, January 20^th, President Biden took the oath of office at a ceremony that was drastically different from past ceremonies due to Covid 19.

As his polices begin to come to light, if like our team you are anxiously waiting to see how policy changes may affect you and your real estate business.

Impact of Biden’s tax plan on Real Estate What we know

The topics below highlight where you will see some of the proposed changes which could have a significant impact on the real estate industry. It is important to be aware of how the application of these potential changes can affect your specific circumstances.

Pay Roll Taxes
Increase Highest Tax Rate
Carried Interest
Long Term Capital Gain and Dividend Rates
Itemized Deductions
20% Qualified Business Income Deduction
Opportunity Zone
1031 Exchanges
Estate Taxes

This article does a good job of summarizing some of the changes:

https://www.elliottdavis.com/impact-of-bidens-tax-plan-on-real-estate-what-we-know/

6 Ways Biden's Tax Plan Could Affect Your Real Estate Business

When it comes to the real estate industry or investing in general, it's important to pay attention to policies that will affect you as a business owner so you can make the necessary adjustments. Some of the changes you will want to know about are in the areas of:

Social Security Payroll Tax
Tax Bracket For Ordinary Income
Limiting Itemized Deductions
Phasing Out the QBI Deduction
Long- Term Capital Gains
Lower Estate Tax Exemption

You can get a breakdown and explanation of how these items could affect you here:

https://www.forbes.com/sites/forbesrealestatecouncil/2021/01/13/eight-ways-the-biden-tax-plan-could-affect-your-real-estate-business/?sh=2109dcbe334c

COVID Impact on Foreclosures and Evictions

Evictions and foreclosure moratorium is planned to be extended through at least March 31, 2021 (1 in 5 renters and 1 in 10 homeowners with a mortgage are behind on payments)

Congress is being asked to provide rental assistance (more details will be coming soon on how the funds will be handled)VA and HUD are also requested to halt foreclosures until at least March 31, 2021
Student loan principal and interest payments are requested to be paused until September 30, 2021 (most millennials affirm that student loans pose the greatest obstacle when considering purchasing a home

Eviction Moratorium: UNDERSTANDING THE EXTENDED CDC ORDER

December COVID-relief Package

The December COVID-relief package included $25 billion for rental assistance.

The monies will be allocated to states through the Department of Treasury. State allocations will be based on population, no state will receive less than $200 million. The language allows landlords to apply for funds on behalf of tenants (with tenant consent).

Rental payments may include rent in arrears as well as utilities and “and other expenses related to housing.” More importantly, the rental payments will be made directly to the housing provider or utility provider, unless the payment is refused by same. These monies are now being distributed to the states, and should be available for application in the next few weeks.

The National Association of Realtors have done an excellent job of outlining the facts here:

https://www.nar.realtor/political-advocacy/coronavirus-housing-providers-faqs

Applicants must document that they have experienced a reduction in income, incurred significant costs, or experienced other financial hardship due to the COVID-19 outbreak

To the extent administratively feasible, grantees must require applicants to document that they have (1) qualified for unemployment benefits or (2) experienced a reduction in income, incurred significant costs, or experienced other financial hardship due directly or indirectly to COVID-19 that threaten the household’s ability to pay the costs of the rental property when due.

Grantees must also require applicants to demonstrate a risk of experiencing homelessness or housing instability, which may include past due rent and utility notices and eviction notices, if any, as part of the application process.

The US Department of Treasury has complied a very helpful Facts sheet here:

https://home.treasury.gov/system/files/136/ERA-Frequently-Asked-Questions_Pub-1-19-21.pdf

Mental health is as vital as physical health.

As part of the COVID-19 Rental Housing Support Initiative, NARPM (National Association of Residential Property Managers) has developed a resource library focusing on mental health that provides you with information and tools to address mental challenges of COVID Mental health is as vital as physical health, especially in times of crises.

The resource library includes:

Video Interview Series “Coping with Isolation” featuring hot rental housing industry topics like Impacts of Corporate Culture, Dealing with Personal Stress, When You’re at a Low Point and Attitudes of Mindfulness.
How to Stay Connected during Physical Distancing highlights four ways to help prevent loneliness during intentional isolation.
Your brain on social distancing and how to overcome loneliness and isolation.
Insulating for Isolation: A mental health checklist for getting through quarantine.
Tips for managing social isolation, staying healthy and connected
Sharing Your Humanity focuses on how to overcome the hurdles created by the need for social distancing
More info here: https://covidinitiative.rentalhousingindustry.org/mentalhealth

Pandemic Unemployment Assistance.

Pandemic Unemployment Assistance (PUA), is now available through March 14, 2021, which allows for up to 50 weeks of unemployment benefits to individuals not otherwise eligible, such as self-employed, who are unable to work as a result of COVID-19.

States will continue to run this program and regular state unemployment benefits under the CARES Act, until March 14, 2021. Eligible workers still receiving benefits as of March 14, 2021, would be able to keep receiving benefit until April 5 (if maximum number of weeks has not been reached). Recent federal legislation also extended the number of weeks PUA benefits were available from 39 to 50 weeks.

The Realtor Political Action Committee (RPAC) does an excellent job of summarizing the COVID Policies all in one place with loads of resources for your state and county here:

https://realtorparty.realtor/state-local-issues/resources/state-local-coronavirus-resources