by Clare Stevens
Shopping for a home can be a little more complicated than finding the property and the money to pay for it. Between you and the night you sip champagne on the porch of your newly acquired house lie mounds of paperwork, with very small print, and jargon that you probably have neither the time nor inclination to wade through.
Why you need a conveyancer
That’s what conveyancers are for. As solicitors who specialise in real estate properties, they can handle all the documents and make sure that you are fully protected by the law.
For example, if you’re selling your home, your conveyancer will prepare the contracts and the property deeds. If you’re buying one, he will coordinate with your mortgage lender and handle all the necessary searches to make sure that you’re not being swindled out of your well-earned pounds. These include a local authority search (to check if your property is sitting on what will later be converted into a highway), a drainage search, a land registry search (so you know you’re talking to the real owner of the property), and a land charges search (to assure the mortgage lender that you can afford the payments).
Some counties have an even longer list of required searches, making a conveyancer even more important. For example, Cheshire county residents need a brine search, to detect if the levels of minerals present in the ground can affect your house or your health. Most conveyancers will also evaluate your property for any damages or hazards that may need repair or correction, which he will then use to negotiate for a better sale price.
Your conveyancer will also be the one to deal with the solicitor of your house’s seller (or buyer, whatever the case may be). He will prepare your offer sheet, schedule the necessary meetings and negotiations, and then prepare the final contracts. Once the sale has actually been made, your conveyancer will also take care of the deeds and make sure that the necessary documents are given to your mortgage lender.
Choosing a conveyancer
With the large amount of money involved in purchasing or selling a home, and the paperwork required by the institutions that will lend that money to you, the fees of a conveyancer are well worth the investment.
Some conveyancers charge a fixed rate, others set the amount according to a value of the property. However, fees should not be the sole determining factor behind your decision to hire someone as your legal representative. Choose someone that you’re comfortable with, who offers excellent customer service, and will update you between the long stretches when documents are being processed. As a rule, legal firms that specialise in conveyancing are more likely to provide this kind of dedicated service. You are guaranteed that you are talking someone who knows the ins and outs of real estate, and will not have to worry that the person assigned to you isn’t too busy in the courts to work on your documents.
It’s also important to ask what is included in the fees, to uncover any hidden charges or at the very least clarify who will shoulder small costs of processing paperwork, such as documentary stamps.
Tuesday, December 30, 2008
Saturday, December 20, 2008
Buying a Diamond in the Rough
It may be your budget, or the thrill of doing it all yourself, but you are in the market for a diamond in the rough. But just how rough can a house be before a lender decides not to take the risk on a mortgage?
When you negotiate the contract, make sure that you include a provision for a home inspection for structural integrity, defects and potential problems. This isn't part of the appraisal, it is a separate detail. A home inspection ascertains the health of the house you are buying. Whether it be a bad roof, leaky plumbing or termite damage, a professional inspector will find all of the major problems. As part of your report, you will receive a list of what needs to be repaired or replaced, the time frame and the potential costs. If you are buying a fixer-upper, you may find that your lender will require an inspection. Some will and some won't. But you should insist on one to protect your best interests.
What if you luck out and there are no major problems, just minor ones? Maybe the carpet is worn and needs replacing. Perhaps the deck needs a little work. New paint and fresh air could be all it needs.
Minor, cosmetic concerns are usually not strong enough to scare away lenders, but could lead to negotiations between the buyers and sellers. Unless you've done this before, you may find a good agent is invaluable to negotiate for you.
If you want certain things repaired by the seller, such as the mailbox fixed and the deck painted, make sure it is in the contract. If it is, the seller must perform. You may be able to have the appraisal include the repairs spelled out in the contract. This can help you when getting a mortgage, as lenders will only lend on the lesser of the appraisal or purchase price. Just make sure that it is all in the contract.
Occasionally, your seller may ask to perform the repairs after closing. Many buyers simply ask for a seller's concession. Instead of installing a $5,000 carpet before closing, the seller agrees to reduce the purchase amount by the $5,000 it will cost the buyer to put in new carpeting.
But if you don't have that $5,000 in hand to buy the carpet, don't expect your lender to give it to you. Even if your contract states that the seller will give you back $5,000 after closing, don't expect it to happen. Cash allowances written into contracts can't happen. The lender will not allow the seller to hand over cash at closing. Your real estate agent should steer you away from this and help construct a sales contract that will please both the buyer and the seller. But don't expect to come home with $5,000. It just won't happen.
Buying a fixer-upper can be rewarding. You get to choose how you want to improve the home. But it is a lot of work and definately not for every buyer or lender. Your best bet is to be completely upfront with your lender about your intentions. This will help the transaction to go smoothly.
When you negotiate the contract, make sure that you include a provision for a home inspection for structural integrity, defects and potential problems. This isn't part of the appraisal, it is a separate detail. A home inspection ascertains the health of the house you are buying. Whether it be a bad roof, leaky plumbing or termite damage, a professional inspector will find all of the major problems. As part of your report, you will receive a list of what needs to be repaired or replaced, the time frame and the potential costs. If you are buying a fixer-upper, you may find that your lender will require an inspection. Some will and some won't. But you should insist on one to protect your best interests.
What if you luck out and there are no major problems, just minor ones? Maybe the carpet is worn and needs replacing. Perhaps the deck needs a little work. New paint and fresh air could be all it needs.
Minor, cosmetic concerns are usually not strong enough to scare away lenders, but could lead to negotiations between the buyers and sellers. Unless you've done this before, you may find a good agent is invaluable to negotiate for you.
If you want certain things repaired by the seller, such as the mailbox fixed and the deck painted, make sure it is in the contract. If it is, the seller must perform. You may be able to have the appraisal include the repairs spelled out in the contract. This can help you when getting a mortgage, as lenders will only lend on the lesser of the appraisal or purchase price. Just make sure that it is all in the contract.
Occasionally, your seller may ask to perform the repairs after closing. Many buyers simply ask for a seller's concession. Instead of installing a $5,000 carpet before closing, the seller agrees to reduce the purchase amount by the $5,000 it will cost the buyer to put in new carpeting.
But if you don't have that $5,000 in hand to buy the carpet, don't expect your lender to give it to you. Even if your contract states that the seller will give you back $5,000 after closing, don't expect it to happen. Cash allowances written into contracts can't happen. The lender will not allow the seller to hand over cash at closing. Your real estate agent should steer you away from this and help construct a sales contract that will please both the buyer and the seller. But don't expect to come home with $5,000. It just won't happen.
Buying a fixer-upper can be rewarding. You get to choose how you want to improve the home. But it is a lot of work and definately not for every buyer or lender. Your best bet is to be completely upfront with your lender about your intentions. This will help the transaction to go smoothly.
Sunday, December 14, 2008
Boost Your Spain Property Rental Profits with Viral Marketing
If you are pressed for time and tenants, you'll want to read this! Property rentals can be very lucrative if you know how to market to your potential guests. Whether it's an apartment for rent, villa rental for vacationers, or a golf holiday rental, you can boost profits with these simple marketing strategies.
Maximize Holiday Rental Promotions Online
Don't ignore the tremendous power of the Internet. Imagine spending a mere $5 to $15 per month to advertise your Spain property rental to folks around the world 24 hours a day, 7 days a week! That's exactly what you're doing when you start your own website that is focused on property rental.
For only a few dollars per month, you can have an entire website dedicated to promoting your apartment for rent or vacation villa rental. You can put as many photos and updates as you want. There are no limits because you will be the owner! You can even offer online specials and discounts to Internet users.
To make your website really popular with the search engines, include travel articles and city information about nearby areas. For example, if you own a rental property in Marbella, Spain you can write content about that area and include keywords about traveling to Marbella. The same goes for other Spain holiday hot spots including Costa del Sol, Benalmadena, Fuengirola, Mijas, Puerto Banus, and Elviria. Tourists will be searching online for a place to stay. Yours can be the one they choose!
Promote for Events and Recreation
If you have a vacation rental that's near a major tourist or sports attraction or where major events take place, then focus some of your marketing around the attraction or the event. For example, if your rental property is near a popular golf course in Spain where major tournaments are held, you can advertise in golf-focused magazines, golf-related stores, or golf web sites. This enables you to reach a targeted audience.
Don't Forget Past Guests
A guest who rented from you once may visit again. You will have all the mailing addresses or email of your guests, so send a mailing out occasionally inviting them to stay once more. Offer a "special" for past guests only. It's much easier to sell to those who already know you than to find new customers.
Include All Features and Benefits in your Promotions
When promoting your rental property, be sure to include all the features and benefits of staying at your rental property. You should list all the items or appliances that are included with their rental for convenience. The more you tell, the more you'll sell. Tourists want no surprises when it comes to a place to stay on their trip.
With these promotion techniques, you can reach a broader audience for your vacation rental property and watch your monthly profits grow!
Maximize Holiday Rental Promotions Online
Don't ignore the tremendous power of the Internet. Imagine spending a mere $5 to $15 per month to advertise your Spain property rental to folks around the world 24 hours a day, 7 days a week! That's exactly what you're doing when you start your own website that is focused on property rental.
For only a few dollars per month, you can have an entire website dedicated to promoting your apartment for rent or vacation villa rental. You can put as many photos and updates as you want. There are no limits because you will be the owner! You can even offer online specials and discounts to Internet users.
To make your website really popular with the search engines, include travel articles and city information about nearby areas. For example, if you own a rental property in Marbella, Spain you can write content about that area and include keywords about traveling to Marbella. The same goes for other Spain holiday hot spots including Costa del Sol, Benalmadena, Fuengirola, Mijas, Puerto Banus, and Elviria. Tourists will be searching online for a place to stay. Yours can be the one they choose!
Promote for Events and Recreation
If you have a vacation rental that's near a major tourist or sports attraction or where major events take place, then focus some of your marketing around the attraction or the event. For example, if your rental property is near a popular golf course in Spain where major tournaments are held, you can advertise in golf-focused magazines, golf-related stores, or golf web sites. This enables you to reach a targeted audience.
Don't Forget Past Guests
A guest who rented from you once may visit again. You will have all the mailing addresses or email of your guests, so send a mailing out occasionally inviting them to stay once more. Offer a "special" for past guests only. It's much easier to sell to those who already know you than to find new customers.
Include All Features and Benefits in your Promotions
When promoting your rental property, be sure to include all the features and benefits of staying at your rental property. You should list all the items or appliances that are included with their rental for convenience. The more you tell, the more you'll sell. Tourists want no surprises when it comes to a place to stay on their trip.
With these promotion techniques, you can reach a broader audience for your vacation rental property and watch your monthly profits grow!
Advice On Selling A House
Maybe you've read lots of advice on selling a house. But do you know the biggest mistake many people make when selling a house? Not understanding real estate value.
You see, it doesn't matter what you think your home is worth. It doesn't matter what youdid to make in nicer for your family. The value of your home is determined by buyers. What you enjoyed about your house may be irrelevant when it's time to sell. Think in terms of what buyers want, and use some of the following advice on selling a house.
1. Know the market. What other similar houses have sold for? Have those examples ready to show potential buyers.
2. Decide on a minimum price - the price below which you just won't move. Don't tell your agent what this minimum is, but negotiate with any buyers who make an offer near or above it.
3. Concentrate on the visible things first. A new mailbox is often a good idea. When buyers fall in love with the house before they even enter it, they forgive a lot of problems.
4. Clean the neighborhood. If a neighbor's yard is a mess, give their kids $10 to pick up the yard. Spend $20 to put flowers in any common-areas, and buyers will have a better first impression of the neighborhood.
5. If you or your agent aren't getting many calls, try something new. Is more advertising necessary? Is the price too high? If price is the problem, drop it fast. That perfect buyer might pass on by while the the home is still over-priced.
6. Listen to prospects. They'll be more objective than you. If you hear several times that the kitchen is dark, get out the white paint.
7. Find the average sales time for your area. If your house is taking longer than average to sell, there's a problem, and usually it's the price.
8. Ask your real estate agent what she plans to do - before you sign a listing agreement. Write down what she says, and hold her to her promises.
9. If there are known problems, such as an old roof, get an estimate for repairs. The sellers may want a $7,000 allowance for a new roof - until you show them your $4,000 estimate.
10. Do improvements that can realisically get you at least a two-to-one return on investment. If $300 to seal the driveway is likely to add $600 to the sales price of the home, do it. Always consider first those things that are most visible.
There are dozens of things you can do to sell your house faster, and get a better price. Start with the ones that will get the most "bang for your buck." Also, read and USE good advice on selling a house.
You see, it doesn't matter what you think your home is worth. It doesn't matter what youdid to make in nicer for your family. The value of your home is determined by buyers. What you enjoyed about your house may be irrelevant when it's time to sell. Think in terms of what buyers want, and use some of the following advice on selling a house.
1. Know the market. What other similar houses have sold for? Have those examples ready to show potential buyers.
2. Decide on a minimum price - the price below which you just won't move. Don't tell your agent what this minimum is, but negotiate with any buyers who make an offer near or above it.
3. Concentrate on the visible things first. A new mailbox is often a good idea. When buyers fall in love with the house before they even enter it, they forgive a lot of problems.
4. Clean the neighborhood. If a neighbor's yard is a mess, give their kids $10 to pick up the yard. Spend $20 to put flowers in any common-areas, and buyers will have a better first impression of the neighborhood.
5. If you or your agent aren't getting many calls, try something new. Is more advertising necessary? Is the price too high? If price is the problem, drop it fast. That perfect buyer might pass on by while the the home is still over-priced.
6. Listen to prospects. They'll be more objective than you. If you hear several times that the kitchen is dark, get out the white paint.
7. Find the average sales time for your area. If your house is taking longer than average to sell, there's a problem, and usually it's the price.
8. Ask your real estate agent what she plans to do - before you sign a listing agreement. Write down what she says, and hold her to her promises.
9. If there are known problems, such as an old roof, get an estimate for repairs. The sellers may want a $7,000 allowance for a new roof - until you show them your $4,000 estimate.
10. Do improvements that can realisically get you at least a two-to-one return on investment. If $300 to seal the driveway is likely to add $600 to the sales price of the home, do it. Always consider first those things that are most visible.
There are dozens of things you can do to sell your house faster, and get a better price. Start with the ones that will get the most "bang for your buck." Also, read and USE good advice on selling a house.
Monday, December 8, 2008
Why investing in hud home ?
I get asked all the time by new real estate investors if investing in hud homes is a good strategy. I will be recap in this article what I tell them….
The increased demand drives up the price and new investors tend to get any and will buy based on emotion instead of logic because they “just want to get their first deal”. If you pay too much for a property, you will lose your shirt on the deal. That’s why it important to not overpay for the property because you make your money on a property on the day you buy, not the day you sell.
This is why it’s important to have the right real estate investing training so you know how to spot the good deals from the bad and not overpay for a property. Your first deal can bankrupt if you don’t structure it the right way. I see this all the time in my real estate investment club. The guys that don’t take the time to invest in their education are soon out of business because they try and figure it out on their own and fail.
Short Sales are a great way to guarantee that you won’t overpay for properties. If you are wondering “what is a short sale “or are wondering what the “definition of a short sale is“here you go. A Short Sale is when the lender accepts less than what is owed on a mortgage on home foreclosures.
All of The deals are no money down.
We don’t give the sellers any money when we get the deed to their house.
The only thing you have to pay when you get a deal is the cost of the notary and recording fee when you record your deed. That’s a maximum of $100. Now my acquisitions manager is a notary so I don’t pay any notary fees. If you don’t put any money down on the house, you aren’t putting any money at risk.
You don’t need good credit to do short sale deals.
You don’t need to go get a mortgage when you do short sales deals. If you don’t need to use your credit, you aren’t putting your credit at risk. You fund the deal the way you structure the transaction. You fund the deal by either:
The ability to own houses without having to make monthly mortgage payments.
There are no monthly payments to make for short sale deals. The houses are either
in foreclosure or about to be in foreclosure. You don’t need to make any payments therefore you aren’t putting any money at risking making monthly payments.
Preforeclosures and Short Sales are extremely easy to find right now.
There aren’t enough investors out there to handle all of the deals in the market. That’s why I’m on a mission to equip you with all of the resources you need so you can go out there and help all of these struggling homeowners and make a lot of money while doing it.
You may here some real estate speakers say to stay away from foreclosures because there is too much competition. Well that was then and this is now. They are teaching old information because they are not currently practicing what they preach. I am actively buying and selling foreclosures in my own backyard and I know what works and what doesn’t work. And I have to tell you there is no competition for preforeclosure and short sales now because there are so many of them.
Short Sales are easy to get because it doesn’t require you to do a lot of negotiating with the seller because they know they don’t have any equity and they’re just looking for a way out. You are their solution! I love working with short sale sellers because they are the most motivated sellers out there.
Short Sales are the most profitable quick turn deals to do in residential real estate because you’re making all of your profit on the discount with the lender
One of the biggest benefits of the short sale business is that it works even better on Luxury Homes. The banks are more flexible and more negotiable on larger mortgages. Banks don’t want to take houses back and they definitely don’t want to take back Luxury homes.
It takes the same amount of work to do a deal on a luxury home than it does to do a starter home. The difference is A Luxury home pays 10 times as much profit. Its like doing 10 deals in one and when you combine the short sale strategy with luxury homes, you’ve got the golden ticket.
You See, Banks are in the money business. They’re not in the Real Estate business. They don’t want to own any properties. Their only interest is making interest on their money. Foreclosing on homes is a hassle they have to deal with because it’s a cost of doing business for them. The sooner you understand this the sooner you will realize how huge this opportunity is for you right now.
When banks lend out money – they have to keep a multiple of 5 times the amount of money they lend out in reserves. When a loan goes bad, it’s now considered a non-performing asset and that limits the amount of money they can lend out.
It costs a bank a minimum of $30,000 to foreclose on a home. They would rather take a discount on the mortgage and get that bad debt off their books so they can lend out more money.
You are the solution for them. Banks need you to help them liquidate their houses so they can get rid of their bad debt. You are doing them a great service.
The increased demand drives up the price and new investors tend to get any and will buy based on emotion instead of logic because they “just want to get their first deal”. If you pay too much for a property, you will lose your shirt on the deal. That’s why it important to not overpay for the property because you make your money on a property on the day you buy, not the day you sell.
This is why it’s important to have the right real estate investing training so you know how to spot the good deals from the bad and not overpay for a property. Your first deal can bankrupt if you don’t structure it the right way. I see this all the time in my real estate investment club. The guys that don’t take the time to invest in their education are soon out of business because they try and figure it out on their own and fail.
Short Sales are a great way to guarantee that you won’t overpay for properties. If you are wondering “what is a short sale “or are wondering what the “definition of a short sale is“here you go. A Short Sale is when the lender accepts less than what is owed on a mortgage on home foreclosures.
All of The deals are no money down.
We don’t give the sellers any money when we get the deed to their house.
The only thing you have to pay when you get a deal is the cost of the notary and recording fee when you record your deed. That’s a maximum of $100. Now my acquisitions manager is a notary so I don’t pay any notary fees. If you don’t put any money down on the house, you aren’t putting any money at risk.
You don’t need good credit to do short sale deals.
You don’t need to go get a mortgage when you do short sales deals. If you don’t need to use your credit, you aren’t putting your credit at risk. You fund the deal the way you structure the transaction. You fund the deal by either:
The ability to own houses without having to make monthly mortgage payments.
There are no monthly payments to make for short sale deals. The houses are either
in foreclosure or about to be in foreclosure. You don’t need to make any payments therefore you aren’t putting any money at risking making monthly payments.
Preforeclosures and Short Sales are extremely easy to find right now.
There aren’t enough investors out there to handle all of the deals in the market. That’s why I’m on a mission to equip you with all of the resources you need so you can go out there and help all of these struggling homeowners and make a lot of money while doing it.
You may here some real estate speakers say to stay away from foreclosures because there is too much competition. Well that was then and this is now. They are teaching old information because they are not currently practicing what they preach. I am actively buying and selling foreclosures in my own backyard and I know what works and what doesn’t work. And I have to tell you there is no competition for preforeclosure and short sales now because there are so many of them.
Short Sales are easy to get because it doesn’t require you to do a lot of negotiating with the seller because they know they don’t have any equity and they’re just looking for a way out. You are their solution! I love working with short sale sellers because they are the most motivated sellers out there.
Short Sales are the most profitable quick turn deals to do in residential real estate because you’re making all of your profit on the discount with the lender
One of the biggest benefits of the short sale business is that it works even better on Luxury Homes. The banks are more flexible and more negotiable on larger mortgages. Banks don’t want to take houses back and they definitely don’t want to take back Luxury homes.
It takes the same amount of work to do a deal on a luxury home than it does to do a starter home. The difference is A Luxury home pays 10 times as much profit. Its like doing 10 deals in one and when you combine the short sale strategy with luxury homes, you’ve got the golden ticket.
You See, Banks are in the money business. They’re not in the Real Estate business. They don’t want to own any properties. Their only interest is making interest on their money. Foreclosing on homes is a hassle they have to deal with because it’s a cost of doing business for them. The sooner you understand this the sooner you will realize how huge this opportunity is for you right now.
When banks lend out money – they have to keep a multiple of 5 times the amount of money they lend out in reserves. When a loan goes bad, it’s now considered a non-performing asset and that limits the amount of money they can lend out.
It costs a bank a minimum of $30,000 to foreclose on a home. They would rather take a discount on the mortgage and get that bad debt off their books so they can lend out more money.
You are the solution for them. Banks need you to help them liquidate their houses so they can get rid of their bad debt. You are doing them a great service.
When Will It be the Buyer's Turn
There has been a lot of talk about the market cooling. Does this mean it is now the buyer's turn at benefiting from market conditions?
A buyer's market occurs when sellers have little or no power in the negotiating of the sale of a home. The buyer has an advantage in that there are more homes to choose from. Housing prices may also be down due to the negotiations of wise buyers.
Are we heading for a buyer's market? Some areas have shown indications that we are. In many areas, home sales have slowed down. Homes are staying on the market much longer. The longer a home is on the market, the sellers should be more willing to negotiate.
Not only is the inventory of homes for sale going up, but the housing prices in some areas have stopped increasing. A few areas are actually experiencing decreases in housing values.
You may be saying that interest rates are working against buyers, but that isn't necessarily the case. Interest rates still remain at a reasonably low level. What this means is that the average person can still afford to buy the average home.
In fact, interest rates help create a buyer's market. With interest rates on the rise, many homeowners are experiencing monthly payments on their adjustable-rate mortgages. Some homeowners who purchased at the peak of the market are just now having their mortgages adjust. There are reports of payments doubling in size for some borrowers who took out risky loans.
Foreclosures are on the rise. People just can't afford their homes any more. They have to sell and they have to sell quickly, before they are foreclosed on. With more and more homes popping up for sale, buyers will have plenty to choose from.
All of these conditions give buyers an edge in the real estate transaction process. Buyers don't have to jump on the first home that they see because homes are no longer few and far between. In many cases, bidding wars won't be an issue. Multiple offers may still occur, but buyers are likely to be a little more relaxed. Of course, this is in general -- there will still be areas and neighborhoods that are experiencing a lot of buyer demand.
If you are looking at buying a home in an area that is experiencing a slow down or buyer's market, you can use things to your advantage. Find out your seller's reason for selling. It could be that time is of the essence, giving you an edge. If there are any contingencies that you need to include in the contract, now is the time. Sellers that are having a hard time selling their homes are more willing to do what is necessary.
Don't forget to have the property appraised -- and make sure that there is an appraisal contingency in your contract. If you are in an area that is experiencing quickly dropping home values and your closing is several months away, I would go ahead and have the property appraised for a second time close to closing.
You should also have the property inspected by a professional. This should happen in both buyer's and seller's markets. You wouldn't buy a car without a test drive, so make sure that you at least look under the hood of the home.
Buyer's markets are great for buyers. If you are in the market to buy a home, pay attention to the home sales in your area. But don't worry too much about the market, what counts the most is buying a nice house that you can afford.
A buyer's market occurs when sellers have little or no power in the negotiating of the sale of a home. The buyer has an advantage in that there are more homes to choose from. Housing prices may also be down due to the negotiations of wise buyers.
Are we heading for a buyer's market? Some areas have shown indications that we are. In many areas, home sales have slowed down. Homes are staying on the market much longer. The longer a home is on the market, the sellers should be more willing to negotiate.
Not only is the inventory of homes for sale going up, but the housing prices in some areas have stopped increasing. A few areas are actually experiencing decreases in housing values.
You may be saying that interest rates are working against buyers, but that isn't necessarily the case. Interest rates still remain at a reasonably low level. What this means is that the average person can still afford to buy the average home.
In fact, interest rates help create a buyer's market. With interest rates on the rise, many homeowners are experiencing monthly payments on their adjustable-rate mortgages. Some homeowners who purchased at the peak of the market are just now having their mortgages adjust. There are reports of payments doubling in size for some borrowers who took out risky loans.
Foreclosures are on the rise. People just can't afford their homes any more. They have to sell and they have to sell quickly, before they are foreclosed on. With more and more homes popping up for sale, buyers will have plenty to choose from.
All of these conditions give buyers an edge in the real estate transaction process. Buyers don't have to jump on the first home that they see because homes are no longer few and far between. In many cases, bidding wars won't be an issue. Multiple offers may still occur, but buyers are likely to be a little more relaxed. Of course, this is in general -- there will still be areas and neighborhoods that are experiencing a lot of buyer demand.
If you are looking at buying a home in an area that is experiencing a slow down or buyer's market, you can use things to your advantage. Find out your seller's reason for selling. It could be that time is of the essence, giving you an edge. If there are any contingencies that you need to include in the contract, now is the time. Sellers that are having a hard time selling their homes are more willing to do what is necessary.
Don't forget to have the property appraised -- and make sure that there is an appraisal contingency in your contract. If you are in an area that is experiencing quickly dropping home values and your closing is several months away, I would go ahead and have the property appraised for a second time close to closing.
You should also have the property inspected by a professional. This should happen in both buyer's and seller's markets. You wouldn't buy a car without a test drive, so make sure that you at least look under the hood of the home.
Buyer's markets are great for buyers. If you are in the market to buy a home, pay attention to the home sales in your area. But don't worry too much about the market, what counts the most is buying a nice house that you can afford.
What Makes A "Green" Home?
While "green" has become quite the buzzword when it comes to home building and design, what exactly it means isn't always clear. There are a few standards for eco-friendly homes, but the term "green" doesn't have a universal definition beyond being a color made by mixing yellow and blue. So how does a consumer know when a home the builder is calling "green" is actually built with an ecological focus, or at least enough of one to justify its price?
Some of the standards for ecologically minded homes include increased insulation. To be really energy efficient, a home should be insulated beyond the minimum local requirements. This includes floor insulation, which in some cases is built right in to the concrete foundation. In addition to the walls, floors and ceilings, windows should also be insulating. Therefore, double paned and/or vinyl windows are becoming the "green" standard.
Energy efficiency should be continued throughout the home. Low water use toilets are a must, and those that have different flush options are extra eco-concious. These options allow you to have a more efficient flush for solid waste, while liquid waste just gets much more conservative flush. Shower heads, washing machines, faucets and dishwashers can also be equipped to limit the water used without compromising function. Air conditioners, refrigerators, heaters and all other appliances within the home should be of the highest standard of energy efficiency. In addition, compact fluorescent lights should be used throughout the home, or replaced by LED lights wherever those are suitable.
Beyond energy efficiency, use of non-toxic, ar at least less-toxic, materials is important in "green" homes. Look for a home with low VOC paints. VOC stands for volatile organic compounds, which are toxins that gas-off from conventional paint. Remember the lighter the pigment, the lower the VOC's, so white or off-white walls are healthier than some of the bolder, trendy colors. This is because it is the paint base that is quality controlled, but it is impossible to take the VOC's out of some pigments.
Another finishing detail that is popular for eco-friendly homes is bamboo or cork flooring. Bamboo is popular because it grows so quickly. It takes about five years to grow bamboo to the right size to make flooring. It is versatile and comes in a variety of styles and colors. Cork is an option because it is sustainable to harvest - removing cork does not damage the cork tree, as it replenishes its cork bark every year anyway. Cork makes a lovely, soft and springy floor surface that is also naturally warmer than many other flooring options.
For our final indoor consideration, eco-friendly homes will use more natural fabrics such as wool and cotton for carpets and window dressings.
Outside the home leaves plenty of room for "green" considerations, too. Xeriscaping is a popular means of landscaping utilizing plants native to the area being built in. These plants are naturally drought-resistant because they are acclimatized to the local environment, needing less watering and maintenance than lawns or beds full of foreign flowers.
Another "green" outdoor trend is utilizing permeable paving stones. These actually absorb water, which then is naturally filtered through the earth and goes back into the ground-water supply. These avoid the toxic run-off that can be caused by water rushing over cement and into drains, carrying oil and exhaust residue straight into the drainage system, which ultimately ends up being a nearby body of water.
If a home you are looking at is being promoted as being "green", don't hesitate to ask the builder about some of these features. If they don't measure up, don't buy it.
Some of the standards for ecologically minded homes include increased insulation. To be really energy efficient, a home should be insulated beyond the minimum local requirements. This includes floor insulation, which in some cases is built right in to the concrete foundation. In addition to the walls, floors and ceilings, windows should also be insulating. Therefore, double paned and/or vinyl windows are becoming the "green" standard.
Energy efficiency should be continued throughout the home. Low water use toilets are a must, and those that have different flush options are extra eco-concious. These options allow you to have a more efficient flush for solid waste, while liquid waste just gets much more conservative flush. Shower heads, washing machines, faucets and dishwashers can also be equipped to limit the water used without compromising function. Air conditioners, refrigerators, heaters and all other appliances within the home should be of the highest standard of energy efficiency. In addition, compact fluorescent lights should be used throughout the home, or replaced by LED lights wherever those are suitable.
Beyond energy efficiency, use of non-toxic, ar at least less-toxic, materials is important in "green" homes. Look for a home with low VOC paints. VOC stands for volatile organic compounds, which are toxins that gas-off from conventional paint. Remember the lighter the pigment, the lower the VOC's, so white or off-white walls are healthier than some of the bolder, trendy colors. This is because it is the paint base that is quality controlled, but it is impossible to take the VOC's out of some pigments.
Another finishing detail that is popular for eco-friendly homes is bamboo or cork flooring. Bamboo is popular because it grows so quickly. It takes about five years to grow bamboo to the right size to make flooring. It is versatile and comes in a variety of styles and colors. Cork is an option because it is sustainable to harvest - removing cork does not damage the cork tree, as it replenishes its cork bark every year anyway. Cork makes a lovely, soft and springy floor surface that is also naturally warmer than many other flooring options.
For our final indoor consideration, eco-friendly homes will use more natural fabrics such as wool and cotton for carpets and window dressings.
Outside the home leaves plenty of room for "green" considerations, too. Xeriscaping is a popular means of landscaping utilizing plants native to the area being built in. These plants are naturally drought-resistant because they are acclimatized to the local environment, needing less watering and maintenance than lawns or beds full of foreign flowers.
Another "green" outdoor trend is utilizing permeable paving stones. These actually absorb water, which then is naturally filtered through the earth and goes back into the ground-water supply. These avoid the toxic run-off that can be caused by water rushing over cement and into drains, carrying oil and exhaust residue straight into the drainage system, which ultimately ends up being a nearby body of water.
If a home you are looking at is being promoted as being "green", don't hesitate to ask the builder about some of these features. If they don't measure up, don't buy it.
What Do Home Buyers Really Want?
While every homebuyer is different, there are some common themes among those that are looking for a new home. Every buyer wants a quality home that they will be proud to live in and won't fall apart within months or even years. Most homebuyers are focusing not only on quantity in the way of square footage, but also quality, as that is what gives a home its worth.
Common Desires
There are some basic things that homebuyers are looking for when they look at a home. Some of the most common are centralized air conditioning, a walk in closet in the master bedroom, a bedroom on the main floor if the home is two or more stories, a patio for entertainment, as well as an oversized garage that will fit multiple cars as well as provide some storage space.
Even these common desires are not straightforward. An air conditioning unit that is 25 years old cannot provide centralized air; most buyers want an efficient central air conditioning unit. A patio needs to truly be an outdoor living space that has had some thought and planning associated with it. And the bedroom on the main floor needs to be big enough for either a master bedroom or a good-sized guest room for either guests or even an aging relative that needs care.
Rooms that Get Noticed
One room that is important to buyers in today's market is the living room. Most buyers are giving up the formal living room and family room split and simply want one, big open floor plan that will allow them to entertain company as well as lounge around and watch movies on a Saturday afternoon. Informal spaces such as this are in because they are more functional.
Another room that will get noticed is the bathroom. Not only do buyers want more than one bathroom, they want them to come fully loaded! Luxury items such as soaking tubs, garden tubs, pricey fixtures, and quality tiling always go over well in the bathroom. Pedestal sinks, claw foot tubs, and a separate shower and tub are also very popular in the bathroom right now and are what most buyers are going for.
The kitchen is also another room that will get more than a once over when a buyer comes in. Stainless steel appliances, high quality wood cabinets, marble or granite counters, kitchen islands, and quality flooring will all go a long way toward selling a home. Buyers see the kitchen as an entertainment area, so if things are in order and are updated a home will likely sell much sooner than if it is not. If the dining area also blends well with the kitchen, this is even better!
The Homes Target Audience
Age really does affect what a home buyer wants in a home. Most realtors will report that those that are less than age 44 usually want a home that is in the suburbs or a subdivision. The home will sell well if it is located near schools, parks, and playgrounds. For buyers over age 45, homes that are one story, less than 10 years old, and on a flat lot with items such as sprinkler systems will appeal to them. Location really is important to home buyers as homes in certain areas may contain features that are important to some buyers but not so important to others.
First time home buyers are also likely to overlook items like pricey fixtures, walk in closets, granite counters, or oversized garages. Typically it is the first time buy that will have a shorter list of must haves, because they are just getting into the market and may be on a stricter budget or just not have a whole lot of experience with offered features. Repeat home buyers will be more likely to have a list of must haves, so a home that is well finished and has all of the items described above will likely appeal to a repeat home buyer.
The type of upgrades one has made to their home or is willing to make to their home will decide who the home will generally appeal to. Of course, home buyers all have their own preferences about what makes a home worth buying, but studies have been done and the general consensus is that older home buyers have a longer list of must haves and items in a home that are very important to them, such as a bedroom on the main floor.
As you can see, homebuyer's want a little of everything, and the specific needs and wants vary widely from buyer to buyer. Generally, a home that is well cared for and offers some modern or updated features will attract many home buyers and if located in the right area, will sell relatively quickly.
Common Desires
There are some basic things that homebuyers are looking for when they look at a home. Some of the most common are centralized air conditioning, a walk in closet in the master bedroom, a bedroom on the main floor if the home is two or more stories, a patio for entertainment, as well as an oversized garage that will fit multiple cars as well as provide some storage space.
Even these common desires are not straightforward. An air conditioning unit that is 25 years old cannot provide centralized air; most buyers want an efficient central air conditioning unit. A patio needs to truly be an outdoor living space that has had some thought and planning associated with it. And the bedroom on the main floor needs to be big enough for either a master bedroom or a good-sized guest room for either guests or even an aging relative that needs care.
Rooms that Get Noticed
One room that is important to buyers in today's market is the living room. Most buyers are giving up the formal living room and family room split and simply want one, big open floor plan that will allow them to entertain company as well as lounge around and watch movies on a Saturday afternoon. Informal spaces such as this are in because they are more functional.
Another room that will get noticed is the bathroom. Not only do buyers want more than one bathroom, they want them to come fully loaded! Luxury items such as soaking tubs, garden tubs, pricey fixtures, and quality tiling always go over well in the bathroom. Pedestal sinks, claw foot tubs, and a separate shower and tub are also very popular in the bathroom right now and are what most buyers are going for.
The kitchen is also another room that will get more than a once over when a buyer comes in. Stainless steel appliances, high quality wood cabinets, marble or granite counters, kitchen islands, and quality flooring will all go a long way toward selling a home. Buyers see the kitchen as an entertainment area, so if things are in order and are updated a home will likely sell much sooner than if it is not. If the dining area also blends well with the kitchen, this is even better!
The Homes Target Audience
Age really does affect what a home buyer wants in a home. Most realtors will report that those that are less than age 44 usually want a home that is in the suburbs or a subdivision. The home will sell well if it is located near schools, parks, and playgrounds. For buyers over age 45, homes that are one story, less than 10 years old, and on a flat lot with items such as sprinkler systems will appeal to them. Location really is important to home buyers as homes in certain areas may contain features that are important to some buyers but not so important to others.
First time home buyers are also likely to overlook items like pricey fixtures, walk in closets, granite counters, or oversized garages. Typically it is the first time buy that will have a shorter list of must haves, because they are just getting into the market and may be on a stricter budget or just not have a whole lot of experience with offered features. Repeat home buyers will be more likely to have a list of must haves, so a home that is well finished and has all of the items described above will likely appeal to a repeat home buyer.
The type of upgrades one has made to their home or is willing to make to their home will decide who the home will generally appeal to. Of course, home buyers all have their own preferences about what makes a home worth buying, but studies have been done and the general consensus is that older home buyers have a longer list of must haves and items in a home that are very important to them, such as a bedroom on the main floor.
As you can see, homebuyer's want a little of everything, and the specific needs and wants vary widely from buyer to buyer. Generally, a home that is well cared for and offers some modern or updated features will attract many home buyers and if located in the right area, will sell relatively quickly.
Villas And Apartments From Elegant Resorts
Elegant Resorts latest Villas and Apartments brochure has just been released, introducing a whole host of new villas and, for the first time, apartments have also been included - to offer a much wider choice and even more flexibility.
This brochure offers a wide range of properties to suit all - couples, small or large groups, families and even groups who may be celebrating a special occasion and require their own island complete with home gym and private cinema. Other facilities that can be enjoyed include: gourmet chefs or cooks on site, butler and maid service, laundress, private pools and jacuzzis, designer interiors, in-villa spas, games rooms, tennis courts, fully captained boats with water-sports, motor cruiser and captain, water ski boats, private cars and chauffeurs - the list goes on. Villas with home cinemas include, Cove Spring House, Villa Maco Lodge, Casa Loniceria, Villa al Boschiglia and Son Salas. Tranquil gardens, magnificent views and sublime beaches complete the paradise.
Flexibility and privacy come immediately to mind when selecting a villa or apartment, and the unique appeal of indulging in your own space is often a welcome alternative to the more traditional hotel experience. A choice of cooking favorite meals (or having them prepared for you by a private chef) is often part of a great holiday, and can also be a godsend to families with small children - alternatively why not use the opportunity to explore local restaurants.
The portfolio spans not only the Caribbean: Barbados, Grenada, Antigua, St Lucia, St Barths, Mustique, Anguilla and the British Virgin Islands, but also Orlando and the Gulf Coast of Florida in North America, and Europe: Portugal, Mallorca, Italy and Greece. It consists myriad styles and sizes from one bedroom such as Porto Zante Villas in Greece, Oceano in Portugal or Villa Atalante in St Barths - up to estates like Mount Hartman Bay in Grenada or Cove Spring House in Barbados, with the capacity to sleep 20 -22 people, or the total privacy of Necker Island in the British Virgin Islands, a perfect hideaway for up to 28 people.
Styles are also varied - the Tuscan-style Villa al Boschiglia in Italy, barefoot casual in Captiva or Naples in Florida, the traditional comfort of Royal Westmoreland in Barbados, the cutting edge contemporary feel of Cerulean Villa in Anguilla or Son Salas in Mallorca, a 17th century Mallorquin estate surrounded by 50 acres of olive, orange and lemon groves.
Families and more active groups can enjoy the Orlando Luxury Villas, providing a refined experience, but with all the attractions of Disney and other theme parks nearby - as well as a choice of championship golf courses on the doorstep.
Private Jets can also be easily arranged to make the very most of precious time and to create that effortlessly stylish holiday to each unique villa or apartment.
Exclusive Special Offer
Elegant Resorts are also offering clients an exclusive special offer at The Old Sugar House in Barbados. Guests who book 7 nights will receive a further 7 nights free from ฃ640 per person - save up to ฃ435 per person. Price is based on 10 adults sharing this 5 bedroom property and includes 14 nights accommodation and return private car transfers. Flights and all meals are extra. This offer is valid from 1 August - 15 December 2007 & 1 May - 30 September 2008 inclusive.
This brochure offers a wide range of properties to suit all - couples, small or large groups, families and even groups who may be celebrating a special occasion and require their own island complete with home gym and private cinema. Other facilities that can be enjoyed include: gourmet chefs or cooks on site, butler and maid service, laundress, private pools and jacuzzis, designer interiors, in-villa spas, games rooms, tennis courts, fully captained boats with water-sports, motor cruiser and captain, water ski boats, private cars and chauffeurs - the list goes on. Villas with home cinemas include, Cove Spring House, Villa Maco Lodge, Casa Loniceria, Villa al Boschiglia and Son Salas. Tranquil gardens, magnificent views and sublime beaches complete the paradise.
Flexibility and privacy come immediately to mind when selecting a villa or apartment, and the unique appeal of indulging in your own space is often a welcome alternative to the more traditional hotel experience. A choice of cooking favorite meals (or having them prepared for you by a private chef) is often part of a great holiday, and can also be a godsend to families with small children - alternatively why not use the opportunity to explore local restaurants.
The portfolio spans not only the Caribbean: Barbados, Grenada, Antigua, St Lucia, St Barths, Mustique, Anguilla and the British Virgin Islands, but also Orlando and the Gulf Coast of Florida in North America, and Europe: Portugal, Mallorca, Italy and Greece. It consists myriad styles and sizes from one bedroom such as Porto Zante Villas in Greece, Oceano in Portugal or Villa Atalante in St Barths - up to estates like Mount Hartman Bay in Grenada or Cove Spring House in Barbados, with the capacity to sleep 20 -22 people, or the total privacy of Necker Island in the British Virgin Islands, a perfect hideaway for up to 28 people.
Styles are also varied - the Tuscan-style Villa al Boschiglia in Italy, barefoot casual in Captiva or Naples in Florida, the traditional comfort of Royal Westmoreland in Barbados, the cutting edge contemporary feel of Cerulean Villa in Anguilla or Son Salas in Mallorca, a 17th century Mallorquin estate surrounded by 50 acres of olive, orange and lemon groves.
Families and more active groups can enjoy the Orlando Luxury Villas, providing a refined experience, but with all the attractions of Disney and other theme parks nearby - as well as a choice of championship golf courses on the doorstep.
Private Jets can also be easily arranged to make the very most of precious time and to create that effortlessly stylish holiday to each unique villa or apartment.
Exclusive Special Offer
Elegant Resorts are also offering clients an exclusive special offer at The Old Sugar House in Barbados. Guests who book 7 nights will receive a further 7 nights free from ฃ640 per person - save up to ฃ435 per person. Price is based on 10 adults sharing this 5 bedroom property and includes 14 nights accommodation and return private car transfers. Flights and all meals are extra. This offer is valid from 1 August - 15 December 2007 & 1 May - 30 September 2008 inclusive.
United Kingdom property investors emerging as biggest market for Philippine Apart-Hotels or Condotels
Beth Collingz, of PLC International Marketing Networks, Lead Marketing Partner with Pacific Concord Properties Inc., whom have Condo Hotel or ‘Condotel’ developments in the Philippine, and whom specializes in working with international clients in a recent conference with UK Investors held in Cebu, said: Since the Dollar value depreciated and UK Pound Sterling hit 92:1 on the Philippine Peso, my phone has been very busy with buyers from the UK interested in purchasing investment properties and holiday homes here in the Philippines.
A lot of this interest is being driven by relatively cheap market prices in the Philippines compared to Europe, especially UK Housing prices, and easy payment options available for our Condotel Developments, but there are other factors, too. Offshore Property Investors, Foreign baby boomers as well as overseas Filipinos, are looking for ways to maximize their return on investments as they approach retirement, and so are purchasing second homes, particularly Condotel Investments where they can use the Condo for vacations and rent it out through In-House Management when not using the unit thereby gaining rental incomes that on today’s purchase prices, give a projected ROI on their investments of some 8-16% depending upon the mode of payment for the unit.
Collingz, who also runs PLC Global Pinoy, an internet based marketing network specializing in Condotel Investments, indicated more than 85% of all sales in Metro Manila were to international clients. These international buyers know it’s a buyer’s market in the Philippines right now - there are a lot of properties available and fewer local buyers, Collingz said. I’m working with clients who are purchasing their second property with me. We also have referrals from many of our prior customers and new clients who have found us through our Web sites, lancastersuites.com and plcglobalpinoy.com which include a special section for international buyers.
Another major driving factor in overseas property investments from the United Kingdom is UK Tax Payers taking advantage of tax incentives and Investing their Self-Invested Pension Plan [SIPP] In Philippine Condotel Investment Real Estate for Rental Income and Retirement said Collingz.
A Self Invested Pension Plan [SIPP] is a personal pension plan but with one very significant difference: administration is separate from investment content, giving the plan holder freedom to choose for himself and change the investments within it. The long-awaited rules on what savers can include in their personal pension plans were unveiled in April 2006 by HM Revenue & Customs. The Guidance Notes confirm that the Chancellor is permitting Self Invested Pension Plan [SIPP] holders to invest in hotels such as the Lancaster Brand of Condo Hotels in the Philippines. The only stipulation is that SIPP holders may not stay in their rooms. With more nights available for paying guests, this not surprisingly increases the room owners' returns. It is estimated there are now more than 70,000 plans holding over ฃ14bn.
A year or so ago, few people in the UK realized that they could manage their Pension Plan portfolios themselves, and even fewer knew that they could invest their SIPP retirement money in homes in the sun which now prove to be among the most popular potential investments to include in a SIPP
If you’re considering using your SIPP to invest in real estate, there are some excellent reasons that you should choose Philippine Condotel Investment real estate to drive your retirement portfolio into high profit margins. The Philippines is ideal for this type of investment because a SIPP can establish title to a property in a country whose legal framework recognizes trusts and a SIPP is simply another form of trust.
Investing in foreign real estate is neither as risky nor as tricky as a lot of people would have you believe. While land and housing prices in the U.K. have soared astronomically in the past decade, the world real estate market is a far different story. It’s still possible to buy a preconstruction Condotel suite at Lancaster The Atrium located in Metro Manila, Philippines, for less than GBP ฃ25,000.00
The beauty of holding property in the Philippines is the low cost of property taxes and maintenance. A GBP ฃ25,000 Condotel suite will only set you back GBP ฃ100 in property taxes per year, and maintenance costs are similarly low. When you add in the tax-protected status of investments made in your SIPP, annual off plan property appreciation and the 8-16% returns through rental income through the Condotel advantage, you have an incredible ROI on a purchase of Philippine Condotel investment real estate enthused Collingz.
With preconstruction property in the Philippines appreciating at some 20% per annum not only do real estate investments look good but the rental income return in the Country is in excess of what many Pension Plans offer for the same or similar investment.
Many new investors are looking to replace failed pension plans and other future saving schemes with a solid investment in Real Estate. Clients are looking for investments that will give them an income for retirement as an alternative to traditional private pension plans that have failed. Most company pension plans are insufficient as are Government Pensions. Bank rates for Savings accounts are at record lows. Savvy investors are now looking for a more solid investment with potential for monthly income. Condotels in the Philippines fit the bill.
This potential, high rates of rental returns from Condo Hotel Investments, up to 16% per annum, opens up a huge market not traditionally looked at by Real Estate Agents and Brokers whom all so often run around looking for normal residential profile buyers without looking at the by far bigger picture of investments, investing and retirement. "We’re here to help our clients and advise them of emerging investment opportunities in the Philippines. Self-Invested Pension Plans and Lancaster Condotels, fit this bill exactly; adds Collingz.
Pacific Concord Properties, Inc., Flagship Lancaster Condo Hotel [Manila] development located along Shaw Boulevard, Mandaluyong City, Metro Manila, is currently one of the hottest Condotel Investments in the Philippines. Lancaster - The Atrium is accepting Reservations for Studio, One, Two & Three Bedroom Suites adopting International Standard Escrow Trust Account Buyer Safe Easy Secure Payment Plans with 6 year interest free payment terms or up to 12 year "In-House" financing available, full condo ownership and minimum monthly maintenance fees, you really should take a moment to look at this Philippine Condotel Investment Opportunity said Collingz.
Further info regarding Condotel Investments in the Philippines, Lancaster Suites currently available suites, price and terms of payment can be found on the firms website.
A lot of this interest is being driven by relatively cheap market prices in the Philippines compared to Europe, especially UK Housing prices, and easy payment options available for our Condotel Developments, but there are other factors, too. Offshore Property Investors, Foreign baby boomers as well as overseas Filipinos, are looking for ways to maximize their return on investments as they approach retirement, and so are purchasing second homes, particularly Condotel Investments where they can use the Condo for vacations and rent it out through In-House Management when not using the unit thereby gaining rental incomes that on today’s purchase prices, give a projected ROI on their investments of some 8-16% depending upon the mode of payment for the unit.
Collingz, who also runs PLC Global Pinoy, an internet based marketing network specializing in Condotel Investments, indicated more than 85% of all sales in Metro Manila were to international clients. These international buyers know it’s a buyer’s market in the Philippines right now - there are a lot of properties available and fewer local buyers, Collingz said. I’m working with clients who are purchasing their second property with me. We also have referrals from many of our prior customers and new clients who have found us through our Web sites, lancastersuites.com and plcglobalpinoy.com which include a special section for international buyers.
Another major driving factor in overseas property investments from the United Kingdom is UK Tax Payers taking advantage of tax incentives and Investing their Self-Invested Pension Plan [SIPP] In Philippine Condotel Investment Real Estate for Rental Income and Retirement said Collingz.
A Self Invested Pension Plan [SIPP] is a personal pension plan but with one very significant difference: administration is separate from investment content, giving the plan holder freedom to choose for himself and change the investments within it. The long-awaited rules on what savers can include in their personal pension plans were unveiled in April 2006 by HM Revenue & Customs. The Guidance Notes confirm that the Chancellor is permitting Self Invested Pension Plan [SIPP] holders to invest in hotels such as the Lancaster Brand of Condo Hotels in the Philippines. The only stipulation is that SIPP holders may not stay in their rooms. With more nights available for paying guests, this not surprisingly increases the room owners' returns. It is estimated there are now more than 70,000 plans holding over ฃ14bn.
A year or so ago, few people in the UK realized that they could manage their Pension Plan portfolios themselves, and even fewer knew that they could invest their SIPP retirement money in homes in the sun which now prove to be among the most popular potential investments to include in a SIPP
If you’re considering using your SIPP to invest in real estate, there are some excellent reasons that you should choose Philippine Condotel Investment real estate to drive your retirement portfolio into high profit margins. The Philippines is ideal for this type of investment because a SIPP can establish title to a property in a country whose legal framework recognizes trusts and a SIPP is simply another form of trust.
Investing in foreign real estate is neither as risky nor as tricky as a lot of people would have you believe. While land and housing prices in the U.K. have soared astronomically in the past decade, the world real estate market is a far different story. It’s still possible to buy a preconstruction Condotel suite at Lancaster The Atrium located in Metro Manila, Philippines, for less than GBP ฃ25,000.00
The beauty of holding property in the Philippines is the low cost of property taxes and maintenance. A GBP ฃ25,000 Condotel suite will only set you back GBP ฃ100 in property taxes per year, and maintenance costs are similarly low. When you add in the tax-protected status of investments made in your SIPP, annual off plan property appreciation and the 8-16% returns through rental income through the Condotel advantage, you have an incredible ROI on a purchase of Philippine Condotel investment real estate enthused Collingz.
With preconstruction property in the Philippines appreciating at some 20% per annum not only do real estate investments look good but the rental income return in the Country is in excess of what many Pension Plans offer for the same or similar investment.
Many new investors are looking to replace failed pension plans and other future saving schemes with a solid investment in Real Estate. Clients are looking for investments that will give them an income for retirement as an alternative to traditional private pension plans that have failed. Most company pension plans are insufficient as are Government Pensions. Bank rates for Savings accounts are at record lows. Savvy investors are now looking for a more solid investment with potential for monthly income. Condotels in the Philippines fit the bill.
This potential, high rates of rental returns from Condo Hotel Investments, up to 16% per annum, opens up a huge market not traditionally looked at by Real Estate Agents and Brokers whom all so often run around looking for normal residential profile buyers without looking at the by far bigger picture of investments, investing and retirement. "We’re here to help our clients and advise them of emerging investment opportunities in the Philippines. Self-Invested Pension Plans and Lancaster Condotels, fit this bill exactly; adds Collingz.
Pacific Concord Properties, Inc., Flagship Lancaster Condo Hotel [Manila] development located along Shaw Boulevard, Mandaluyong City, Metro Manila, is currently one of the hottest Condotel Investments in the Philippines. Lancaster - The Atrium is accepting Reservations for Studio, One, Two & Three Bedroom Suites adopting International Standard Escrow Trust Account Buyer Safe Easy Secure Payment Plans with 6 year interest free payment terms or up to 12 year "In-House" financing available, full condo ownership and minimum monthly maintenance fees, you really should take a moment to look at this Philippine Condotel Investment Opportunity said Collingz.
Further info regarding Condotel Investments in the Philippines, Lancaster Suites currently available suites, price and terms of payment can be found on the firms website.
Tips For Property Sellers
For the last five years, you could pretty much list a property on the market in any condition and have it sell. That is no longer the case, which means you need some tips.
Tips For Property Sellers
In recent years, selling a property was a breeze. As long as the structure was in any kind of decent shape, you could expect offers to rain down when it hit the market. Sometimes, you would close the sale before the property ever hit the market! To say it was a sellers market is a slight understatement.
As was inevitable, the real estate market has cooled off a bit. From a historical perspective, it is still red hot although not as hot as the last few years. As a seller, this means you need to start focusing on the fundamentals of selling your property. The following tips should get you focused.
Purchasing a property is an emotional decision. To this end, you need to position yours to captivate potential buyers. In this case, this means giving it a makeover. For instance, you should:
1. Cut back the forest known as your yard.
2. If your landscaping isn’t that great, spend the money on new plants to make it look appealing. The buyer has to see themselves living in the property, so make it a paradise.
3. Clean the roof and fix any loose shingles, etc. Buyers and appraisers always look at roofs closely.
4. Clean up any paint issues on the interior of the property including behind doors, in closets and so on. This may sound odd, but buyers will look in every little cranny.
5. Clean up any paint issues on the exterior of the property. Obvious spots include the sides of the home and behind any plants that sit up against the wall.
6. Clean your driveway and garage floor. Nasty oil spots take away from the appearance of your gem. A super clean driveway and garage floor is a sign of a seller that has made a major effort to maintain the property, a factor buyers will view very favorably.
7. Finally, list it for sale on the Internet. A vast majority of buyers now surf the web looking for their dream residence. If your property isn’t listed, they will not see it.
At the end of the day, all of the above boils down to one real theme. What would you look for if you were out shopping for a property? Make a list and then analyze your property with an eye towards those items.
Tips For Property Sellers
In recent years, selling a property was a breeze. As long as the structure was in any kind of decent shape, you could expect offers to rain down when it hit the market. Sometimes, you would close the sale before the property ever hit the market! To say it was a sellers market is a slight understatement.
As was inevitable, the real estate market has cooled off a bit. From a historical perspective, it is still red hot although not as hot as the last few years. As a seller, this means you need to start focusing on the fundamentals of selling your property. The following tips should get you focused.
Purchasing a property is an emotional decision. To this end, you need to position yours to captivate potential buyers. In this case, this means giving it a makeover. For instance, you should:
1. Cut back the forest known as your yard.
2. If your landscaping isn’t that great, spend the money on new plants to make it look appealing. The buyer has to see themselves living in the property, so make it a paradise.
3. Clean the roof and fix any loose shingles, etc. Buyers and appraisers always look at roofs closely.
4. Clean up any paint issues on the interior of the property including behind doors, in closets and so on. This may sound odd, but buyers will look in every little cranny.
5. Clean up any paint issues on the exterior of the property. Obvious spots include the sides of the home and behind any plants that sit up against the wall.
6. Clean your driveway and garage floor. Nasty oil spots take away from the appearance of your gem. A super clean driveway and garage floor is a sign of a seller that has made a major effort to maintain the property, a factor buyers will view very favorably.
7. Finally, list it for sale on the Internet. A vast majority of buyers now surf the web looking for their dream residence. If your property isn’t listed, they will not see it.
At the end of the day, all of the above boils down to one real theme. What would you look for if you were out shopping for a property? Make a list and then analyze your property with an eye towards those items.
Things to Consider When Selling Your Home
Although the real estate market has cooled off a bit, it is still a hot market in historical terms. As a seller, this is good news when you decide to sell your home.
Things to Consider When Selling Your Home
A year or so ago, selling a residence was laughably easy. In some markets, it was clear that you could list practically anything and get an offer within a week or so. The market was so hot that some homes sold before actually appearing in MLS listings and such. For sellers, it just didn’t get any better.
As the market has cooled, sellers have had to return to the basic premise of selling a home. Homes simply are not being snapped up right and left. Here are a few things you should consider.
1. Can you afford another home? Most sellers intend to purchase another home with the proceeds from their sale. Logically, this makes sense, but real estate is not always logical. One area that can be problematic is the interest rate on loans. Your current loan may have a very low interest rate, but you will probably have a much higher one on a new loan. Will you be able to handle the increased monthly payments? Make sure.
2. Why are you going to sell? Some people rush into the sale of a home and come to regret it. Is there an objective reason, such as relocation, for selling your home or are you trying to cash in at the top of the market? Cashing in is not a bad thing, but it is unnecessary if you intend to stay in the same area for the next 10 to 20 years. Markets will bounce up and down, so you need not be overly concerned about the short term.
3. What is the home worth? This may sound like a simple question, but it is one of the biggest issues you should be addressing. Remember, the value of the home is set by comparable homes and appraisals, not what you personally think it is worth. Getting an understanding of the objective value gives you the ability to determine whether selling is a good idea or not.
The decision to sell is a serious one. It is no secret real estate has dramatically appreciated in the last few years. Whether you should cash in on that fact is a question only you can answer.
Things to Consider When Selling Your Home
A year or so ago, selling a residence was laughably easy. In some markets, it was clear that you could list practically anything and get an offer within a week or so. The market was so hot that some homes sold before actually appearing in MLS listings and such. For sellers, it just didn’t get any better.
As the market has cooled, sellers have had to return to the basic premise of selling a home. Homes simply are not being snapped up right and left. Here are a few things you should consider.
1. Can you afford another home? Most sellers intend to purchase another home with the proceeds from their sale. Logically, this makes sense, but real estate is not always logical. One area that can be problematic is the interest rate on loans. Your current loan may have a very low interest rate, but you will probably have a much higher one on a new loan. Will you be able to handle the increased monthly payments? Make sure.
2. Why are you going to sell? Some people rush into the sale of a home and come to regret it. Is there an objective reason, such as relocation, for selling your home or are you trying to cash in at the top of the market? Cashing in is not a bad thing, but it is unnecessary if you intend to stay in the same area for the next 10 to 20 years. Markets will bounce up and down, so you need not be overly concerned about the short term.
3. What is the home worth? This may sound like a simple question, but it is one of the biggest issues you should be addressing. Remember, the value of the home is set by comparable homes and appraisals, not what you personally think it is worth. Getting an understanding of the objective value gives you the ability to determine whether selling is a good idea or not.
The decision to sell is a serious one. It is no secret real estate has dramatically appreciated in the last few years. Whether you should cash in on that fact is a question only you can answer.
The Real Estate Market in Jacksonville, Florida
Whether there is a real estate bubble and, if so, will it pop is a popular topic across the country. The real estate marketing in Jacksonville, Florida, however, is a major exception.
The Real Estate Market in Jacksonville, Florida
Jacksonville is located in the northeastern part of Florida and is just below the border with Georgia. Real estate in Jacksonville is a steal, particularly given appreciation rates. A Jacksonville home will run you $125,000 on average, about $50,000 less than the national average.
The real beauty of homes in Jacksonville is the appreciation rate. Despite prices that are well below national averages, appreciation rates are excellent at approximately 14 percent. Put in practical terms, it is the perfect time to buy. You can get an excellent price and expect property values to increase. This represents the ideal real estate scenario.
As to the city of Jacksonville, things are definitely on the upswing. Job growth is triple the national average, and is expected to double or even triple over the next few months. Despite this strong growth, the cost of living is about 10 percent less than the national average. You’ll find more doctors on average than other locations in the nation, but the cost of medical care is about 15 percent less than you’ll find elsewhere on average. Since you are in Florida, you’ll pay no state income tax, which makes you’re money go a lot farther.
Although Jacksonville is located in the far north of Florida, it has a similar climate to the rest of the state. You’re going to get about 50 inches of rain on average and it is going to be in the nineties in the summer. Unlike Miami, however, the winter can get a bit nippy with temperatures falling into the mid forties. For many people, however, this is viewed as a positive since it is nice to get a break from the hot Florida climate every once in a while.
With low home prices, solid appreciation rates and no state income tax, Jacksonville is a prime real estate market.
The Real Estate Market in Jacksonville, Florida
Jacksonville is located in the northeastern part of Florida and is just below the border with Georgia. Real estate in Jacksonville is a steal, particularly given appreciation rates. A Jacksonville home will run you $125,000 on average, about $50,000 less than the national average.
The real beauty of homes in Jacksonville is the appreciation rate. Despite prices that are well below national averages, appreciation rates are excellent at approximately 14 percent. Put in practical terms, it is the perfect time to buy. You can get an excellent price and expect property values to increase. This represents the ideal real estate scenario.
As to the city of Jacksonville, things are definitely on the upswing. Job growth is triple the national average, and is expected to double or even triple over the next few months. Despite this strong growth, the cost of living is about 10 percent less than the national average. You’ll find more doctors on average than other locations in the nation, but the cost of medical care is about 15 percent less than you’ll find elsewhere on average. Since you are in Florida, you’ll pay no state income tax, which makes you’re money go a lot farther.
Although Jacksonville is located in the far north of Florida, it has a similar climate to the rest of the state. You’re going to get about 50 inches of rain on average and it is going to be in the nineties in the summer. Unlike Miami, however, the winter can get a bit nippy with temperatures falling into the mid forties. For many people, however, this is viewed as a positive since it is nice to get a break from the hot Florida climate every once in a while.
With low home prices, solid appreciation rates and no state income tax, Jacksonville is a prime real estate market.
The Latest Information on Florida Mortgage
The following article presents the very latest information on Florida mortgage. If you have a particular interest in Florida mortgage, then this informative article is required reading.
Florida real estate is continuously at its peak: offering low interest rates, low down payment, high home value and abundant housing supply. To compliment all these positivity in the Florida real estate arena, various property investment opportunities are also open in this state.
It is thus essential that if you can afford to invest on the Florida real estate, start it immediately to take advantage of the boom. Additionally, experts say that you need to move immediately and seek Florida mortgage if it is the only way for you to take advantage of this positive experience in the Florida real estate world.
The reason why you need to rush is because this trend of low cost mortgages and real estate investing in Florida may already take a different route. You may need to consider that the world economy is already taking steam and thus Florida real estate may suffer as well.
Knowledge can give you a real advantage. To make sure you’re fully informed about Florida mortgage, keep reading.
You may thus need to take advantage of the current trend and hope to be able to get your Florida mortgage application approved immediately.
It may however be necessary that before you check out a mortgage lead company, you need to assess your capacity to pay. This is because if you are not able to pay your obligation as evidenced by the mortgage contract in Florida, the property you acquire or the property you used as collateral may be subjected to foreclosure.
Financial experts thus recommend that you make a thorough assessment of your financial condition before you think of Florida mortgage loans.
Write down all you income sources from now until about twenty to thirty years, consider your expenditures whether normal or otherwise. The balance is the money you can use to pay-off Florida mortgages, if ever. Ideally, it should be at least 1/3 of your total household income.
One-third is an ideal figure; however, this needs to depend on your spending pattern and your normal spending requirements. That balance is what you can use for mortgage payments; ensure that the figure will be regular and that you are sure you can set it aside for the sole purpose of paying your Florida mortgage loan.
This may now give you the real picture of how much you can afford as mortgage payments in your Florida property. Even with the current trending that Florida mortgages enjoy low interest, you may still need to consider that soon it may change.
Thus, if you find it feasible to invest in Florida real estate while investing is still on a low base, act now.
Seek assistance from reliable and experienced mortgage counselors. They will work with you until you are comfortable and clear with the terms and conditions of Florida mortgages. They will not ask you to sign anything until or confirm with you anything until you are able to sit-down with them and discuss you financial condition. They understand how hard you worked for you money and thus will help you decide on the most suited Florida mortgage.
To find out more about Florida mortgage plans and how They can help you, log on to their website and see how many people have already taken advantage of the reliable and experienced The counselors.
That’s the latest from the Florida mortgage authorities. Once you’re familiar with these ideas, you’ll be ready to move to the next level.
Florida real estate is continuously at its peak: offering low interest rates, low down payment, high home value and abundant housing supply. To compliment all these positivity in the Florida real estate arena, various property investment opportunities are also open in this state.
It is thus essential that if you can afford to invest on the Florida real estate, start it immediately to take advantage of the boom. Additionally, experts say that you need to move immediately and seek Florida mortgage if it is the only way for you to take advantage of this positive experience in the Florida real estate world.
The reason why you need to rush is because this trend of low cost mortgages and real estate investing in Florida may already take a different route. You may need to consider that the world economy is already taking steam and thus Florida real estate may suffer as well.
Knowledge can give you a real advantage. To make sure you’re fully informed about Florida mortgage, keep reading.
You may thus need to take advantage of the current trend and hope to be able to get your Florida mortgage application approved immediately.
It may however be necessary that before you check out a mortgage lead company, you need to assess your capacity to pay. This is because if you are not able to pay your obligation as evidenced by the mortgage contract in Florida, the property you acquire or the property you used as collateral may be subjected to foreclosure.
Financial experts thus recommend that you make a thorough assessment of your financial condition before you think of Florida mortgage loans.
Write down all you income sources from now until about twenty to thirty years, consider your expenditures whether normal or otherwise. The balance is the money you can use to pay-off Florida mortgages, if ever. Ideally, it should be at least 1/3 of your total household income.
One-third is an ideal figure; however, this needs to depend on your spending pattern and your normal spending requirements. That balance is what you can use for mortgage payments; ensure that the figure will be regular and that you are sure you can set it aside for the sole purpose of paying your Florida mortgage loan.
This may now give you the real picture of how much you can afford as mortgage payments in your Florida property. Even with the current trending that Florida mortgages enjoy low interest, you may still need to consider that soon it may change.
Thus, if you find it feasible to invest in Florida real estate while investing is still on a low base, act now.
Seek assistance from reliable and experienced mortgage counselors. They will work with you until you are comfortable and clear with the terms and conditions of Florida mortgages. They will not ask you to sign anything until or confirm with you anything until you are able to sit-down with them and discuss you financial condition. They understand how hard you worked for you money and thus will help you decide on the most suited Florida mortgage.
To find out more about Florida mortgage plans and how They can help you, log on to their website and see how many people have already taken advantage of the reliable and experienced The counselors.
That’s the latest from the Florida mortgage authorities. Once you’re familiar with these ideas, you’ll be ready to move to the next level.
Tgr asia, Developers of jumeirah private island phuket commence
HONG KONG (Insert date) - Jumeirah Private Island Phuket, Asia Pacific’s most exclusive development is scheduled for completion in 2009 and set to offer levels of luxury, privacy and security as yet unseen in Asia Pacific. It will also be home to an elite super yacht marina and the private members only Jumeirah Private Island Yacht Club.
The super yacht marina will have 101 berths and will offer true “super yacht” facilities with 24 hour deep water access. The marina will double the number of designated “super yacht” berths in Thailand (thailand property, thailand homes), with 7 slips measuring in excess of 45 metres and an average slip length of over 22 metres.
The marina, located in a protected lagoon on the east coast of the island is surrounded by tropical mangroves, and will be built to top international standards. The marina will include facilities such as helicopter and/or ferry access to and from Phuket, fuel dock with pump out facility, yacht maintenance and repair services and individual berth technology pipes.
The Jumeirah Private Island Phuket Yacht Club (megayachts phuket, islands phuket, mega yachts phuket, phuket islands) is planning to host regattas and black tie functions and will offer a range of facilities; club house, swimming pool, accommodation, formal and informal waterfront dining, business centre and fitness centre.
The benefits of berthing in Phuket (phuket property, real estate phuket) include fuel, crew and dockage costs up to 80 percent cheaper than Europe and no luxury yacht taxes.
TGR contact : Anthony Franklin – Partner, Marketing Director.
Note to editors:
TGR
TGR Group develops and markets award winning luxury hotels and resorts. The management team has over 100 years combined experience working with leading, global construction companies and a successful track record across three continents.
Jumeirah
Jumeirah properties are regarded as amongst the most luxurious and innovative in the world and have won numerous international travel and tourism awards. The rapidly growing Dubai-based luxury international hospitality management group encompasses the world renowned Burj Al Arab, the world’s most luxurious hotel, the multi-award winning Jumeirah Beach Hotel, Jumeirah Emirates Towers, Madinat Jumeirah and Jumeirah Bab Al Shams Desert Resort & Spa in Dubai, the Jumeirah Carlton Tower and Jumeirah Lowndes Hotel in London and the Jumeirah Essex House on Central Park South in New York.
The Jumeirah Group portfolio also includes Wild Wadi, regarded as one of the premier water parks outside of North America and The Emirates Academy of Hospitality Management, the region’s only third level academic institution specializing in the hospitality and tourism sectors.
Building on this success, Jumeirah Group became a member of Dubai Holding in 2004, a collection of leading Dubai based businesses and projects, in a step that aims to initiate a new phase of growth and development for the group.
Jumeirah’s ambitious expansion plans to grow its portfolio of luxury hotels and resorts worldwide to 57 by 2011 are well underway with projects currently under development in Dubai, Abu Dhabi, Aqaba, Doha, Phuket, Shanghai, Bermuda, Mallorca and London.
Tags: Thailand property, Thailand homes, real estate companies Phuket, property in Phuket, Phuket islands, private islands, Phuket villas, Phuket hotel resorts, Phuket property, real estate Phuket, tgr, 5 star hotels phuket, marinas phuket, homes for sale phuket, islands phuket, resort developments phuket, beach villas phuket, jumeirah beach villas, luxury villas phuket, jumeirah
The super yacht marina will have 101 berths and will offer true “super yacht” facilities with 24 hour deep water access. The marina will double the number of designated “super yacht” berths in Thailand (thailand property, thailand homes), with 7 slips measuring in excess of 45 metres and an average slip length of over 22 metres.
The marina, located in a protected lagoon on the east coast of the island is surrounded by tropical mangroves, and will be built to top international standards. The marina will include facilities such as helicopter and/or ferry access to and from Phuket, fuel dock with pump out facility, yacht maintenance and repair services and individual berth technology pipes.
The Jumeirah Private Island Phuket Yacht Club (megayachts phuket, islands phuket, mega yachts phuket, phuket islands) is planning to host regattas and black tie functions and will offer a range of facilities; club house, swimming pool, accommodation, formal and informal waterfront dining, business centre and fitness centre.
The benefits of berthing in Phuket (phuket property, real estate phuket) include fuel, crew and dockage costs up to 80 percent cheaper than Europe and no luxury yacht taxes.
TGR contact : Anthony Franklin – Partner, Marketing Director.
Note to editors:
TGR
TGR Group develops and markets award winning luxury hotels and resorts. The management team has over 100 years combined experience working with leading, global construction companies and a successful track record across three continents.
Jumeirah
Jumeirah properties are regarded as amongst the most luxurious and innovative in the world and have won numerous international travel and tourism awards. The rapidly growing Dubai-based luxury international hospitality management group encompasses the world renowned Burj Al Arab, the world’s most luxurious hotel, the multi-award winning Jumeirah Beach Hotel, Jumeirah Emirates Towers, Madinat Jumeirah and Jumeirah Bab Al Shams Desert Resort & Spa in Dubai, the Jumeirah Carlton Tower and Jumeirah Lowndes Hotel in London and the Jumeirah Essex House on Central Park South in New York.
The Jumeirah Group portfolio also includes Wild Wadi, regarded as one of the premier water parks outside of North America and The Emirates Academy of Hospitality Management, the region’s only third level academic institution specializing in the hospitality and tourism sectors.
Building on this success, Jumeirah Group became a member of Dubai Holding in 2004, a collection of leading Dubai based businesses and projects, in a step that aims to initiate a new phase of growth and development for the group.
Jumeirah’s ambitious expansion plans to grow its portfolio of luxury hotels and resorts worldwide to 57 by 2011 are well underway with projects currently under development in Dubai, Abu Dhabi, Aqaba, Doha, Phuket, Shanghai, Bermuda, Mallorca and London.
Tags: Thailand property, Thailand homes, real estate companies Phuket, property in Phuket, Phuket islands, private islands, Phuket villas, Phuket hotel resorts, Phuket property, real estate Phuket, tgr, 5 star hotels phuket, marinas phuket, homes for sale phuket, islands phuket, resort developments phuket, beach villas phuket, jumeirah beach villas, luxury villas phuket, jumeirah
Summary Regulatory History of Cost Segregation
BACKGROUND
In order to calculate depreciation for Federal income tax purposes, taxpayers must use the correct method and proper recovery period for each asset or property owned. Property often consists of numerous asset types with different recovery periods, which must be separated into individual components or asset groups having the same recovery periods and placed-in-service dates.
When the actual cost of each individual component is available, this is a rather simple procedure. However, when only lump-sum costs are available, cost estimating techniques may be required to “segregate” or “allocate” costs to individual components of property (e.g., land, land improvements, buildings, equipment, furniture and fixtures, etc.). This type of analysis is generally called a “cost segregation study,” “cost segregation analysis,” or “cost allocation study.”
Significant tax benefits may be derived from utilizing shorter recovery periods. The issues for Internal Revenue Service Examiners (Service Examiners) are 1) the rationale used to segregate property into its various components, and 2) the methods used to allocate the total project costs among these components.
The most common situation is the allocation or reallocation of building costs to tangible personal property. A building, termed "section (ง) 1250 property", is generally 39-year property eligible for straight-line depreciation. Equipment, furniture and fixtures, termed "section (ง) 1245 property", are tangible personal property. Tangible personal property has a short recovery period, thus, a faster depreciation write-off (and tax benefit).
Property allocations and reallocations are typically based on criteria established under the Investment Tax Credit (ITC). In a recent landmark decision, the Tax Court ruled that, to the extent tangible personal property is included in an acquisition or in overall costs, it should be treated as such for depreciation purposes. The court also decided that the rules for determining whether property qualifies as tangible personal property for purposes of ITC (under pre-1981 tax law) are also applicable to determining depreciation under current law. [See Hospital Corporation of America, 109 T.C. 21 (1997)] The Service acquiesced to the use of ITC rules for distinguishing ง 1245 property from ง 1250 property.
OVERVIEW
It is important to review the relevant legal history and the motivations of taxpayers to allocate costs to personal property. The legislative and judicial history of depreciation, depreciation recapture, and Investment Tax Credit (ITC) are closely related.
The Internal Revenue Code (IRC) has historically authorized depreciation as an allowance for the exhaustion, wear and tear, and obsolescence of property used in a trade or business or for the production of income (IRC Sec. 167 and the regulations thereunder.)
BULLETIN F
For example, IRS Publication Number 173 (also known as "Bulletin F") was published in 1942 and provided a useful life guide for various types of property based on the nature of a taxpayer's business or industry. Bulletin F identified over 5,000 assets used in 57 different industries and activities and described two procedures for computing depreciation for buildings:
Composite Method: A depreciation chart provided a composite rate for buildings, including all installed building equipment.
Component Method: Taxpayers could elect to depreciate the building equipment separately from the structure itself.
COMPONENT DEPRECIATION
In 1959, the Tax Court recognized the right of taxpayers to calculate depreciation using a component method for newly constructed property [Shainberg vs. Commissioner, 33 T.C. 241 (1959)].
Revenue Procedure 62-21, 1962-2 C.B. 418, superceded Bulletin F and provided safe harbor useful lives based on industry-specific asset classes for taxpayers that met the reserve ratio test (a complex provision).
Revenue Ruling 66-111, 1966-1 C.B. 46 (subsequently modified by Revenue Ruling 73-410, 1973-2 C.B. 53), addressed the use of component depreciation for used real property, in light of the decision in Shainberg. The ruling concluded that “When a used building is acquired for a lump sum consideration, separate components are not bought; a unified structure is purchased… Accordingly, an overall useful life for the building must be determined on the basis of the building as a whole.”
Revenue Ruling 68-4,1968-1 C.B. 77, concluded that the asset guideline classes outlined in Revenue Procedure 62-21 “…may only be used where all the assets of the guideline class (building shell and its components) are included in the same guideline class for which one overall composite life is used for computing depreciation.”
ASSET DEPRECIATION RANGE (ADR)
The elective ADR system, implemented by Revenue Procedure 72-10, 1972-1 C. B. 721, was developed for tangible assets placed in service after 1970. All tangible assets were placed in one of the more than 100 asset guideline classes (which generally corresponded to those set out in Rev. Proc. 62-21). The classes of assets were based on the business and industry of the taxpayer. In addition, each class of assets other than land improvements and buildings was given a range of years (called "asset depreciation range") that was about 20 percent above and below the class life.
If the taxpayer did not elect the ADR system, Revenue Ruling 73-410, 1973-2 C.B. 53, clarified that a taxpayer may utilize the component method of depreciating used property if a qualified appraiser "…properly allocates the costs between non-depreciable land and depreciable building components as of the date of purchase."
ACCELERATED COST RECOVERY SYSTEM (ACRS)
Congress enacted IRC Sec. 168 I 1981. The ACRS was intended to provide a less complicated method for computing depreciation (known as “cost recovery” by eliminating salvage value and specifying recovery periods of various classes of assets. In contrast to the elective ADR system, ACRS was mandatory and provided only five (later six) recovery periods. ACRS also allowed for a faster write-off of assets than had been allowed under previous rules.
MODIFIED ACCELERATED COST RECOVERY SYSTEM (MACRS)
Significant modifications, generally less favorable to taxpayers, were made to ACRS by the Tax Reform ACT of 1986 (effective for property placed in service after December 31, 1986). Under the Modified Accelerated Cost Recovery System, the recovery period for buildings and structural components increased dramatically.
Revenue Procedure 87-56, 1987-2 C.B. 674, provides the class lives and recovery periods for most MACRS assets. These determinations are based on the specific industry of a taxpayer and the specific activity for which the assets are used.
EXPENSING PROVISIONS AND BONUS DEPRECIATION
Another incentive for allocating costs to shorter-lived property is the expensing provision of IRC Sec. 179. By maximizing the costs allocable to tangible personal property, the taxpayer can not only get an immediate write-off under ง 179, but also qualifies for a shorter recovery period under ง 168. Also, the 30-percent additional first year bonus depreciation allowance pursuant to ง 168(k), enacted by the Job Creation and Worker Assistance Act of 2002 (Public Law 107-147), provides even further incentive for taxpayers to segregate property into shorter recovery periods. The Jobs and Growth Reconciliation Tax Act of 2003 recently increased the bonus depreciation under ง 168(k) to 50 percent for certain qualifying property acquired after May 5, 2003, and placed in service before January 1, 2006. Section 1400L provides special rules for qualifying property used by a business in the New York Liberty Zone.
INVESTMENT TAX CREDIT - IRC ง 48
In order to stimulate the economy, Congress enacted Code ง 48 in 1962. The ITC was designed to encourage the modernization and expansion of productive facilities through the purchase of certain new or used assets for use in a trade or business. Over the years, many other changes were made to the rules, including reductions in the depreciable basis of property for which ITC was claimed, temporary suspensions, termination, reinstatement, and, ultimately, the general repeal of ITC in 1986.
TANGIBLE PERSONAL PROPERTY
Eligible ITC property is defined in former IRC ง 48(a)(1) with reference to IRC ง 38 (in fact, eligible property is often referred to as "section 38 property"). It included tangible personal property that was closely integrated into the taxpayer's trade or business. Land, buildings, structural components contained in or attached to buildings, and other inherently permanent structures, generally were not eligible for ITC.
SECTION 1245 AND SECTION 1250 PROPERTY
The benefits of the ITC were somewhat offset by the provisions of IRC Sec. 1245 and 1250, also enacted in 1962. These Code sections result in the conversion of capital gain to ordinary income on the disposition of a property, to the extent its basis has been reduced by an accelerated depreciation method. The definitions of property for purposes of Sec. 1245 and 1250 are very similar to that for ITC and make reference to the regulations under Sec. 48 and the definitions under Sec. 38 property. These interrelated Code sections and the regulations (38, 48, 1245 and 1250) provide the pertinent authority for determining eligibility for ITC.
The primary issue in cost segregation studies is the proper classification of assets as either ง 1245 or ง 1250 property. Accordingly, the ITC rules are critical in determining whether a taxpayer has classified property into the appropriate asset class.
INHERENT PERMANENCY TEST AND THE “WHITECO FACTORS”
Revenue Ruling 75-178, 1975-1 C.B.9 outlined several criteria to determine Sec. 1245 property classification. The classic pronouncement addressing inherent permanency was Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664, 672-673 (1975). The Tax Court, based on an analysis of judicial precedent, developed six questions designed to ascertain whether a particular asset qualifies as tangible personal property. The questions were referred to as the “Whiteco Factors.”
It should also be noted, however, that movability is not the only determinative factor in measuring inherent permanency. In L.L. Bean, Inc. v. Comm., T.C. Memo, 1997-175, aff’d, 145 F.3d 53 (1st Cir. 1998), it was determined that, even though the structure could be moved, it was designed to remain permanently in place. Thus, it was determined to be an inherently permanent structure.
REPEAL OF ITC AND COMPONENT DEPRECIATION
Due to the significant tax benefits derived from ITC-eligible property, the use of component depreciation proliferated during the 1970's and created problems not unlike those faced today by taxpayers, practitioners, and the Service regarding cost segregation studies. The problem became so pronounced during the late 1970’s that Congress disallowed component depreciation as a method of computing depreciation for buildings, simultaneously with the enactment of ACRS in the Economic Recovery Tax Act of 1981 (ERTA) [see IRC ง 168(f)(1)].
In 1986, MACRS reiterated that the use of component depreciation was not allowable.
HOSPITAL CORPORATION OF AMERICA v. COMMISSIONER ("HCA") (1997)
A landmark decision, Hospital Corporation of America v. Commissioner, 109 T.C. 21 (1997)("HCA"), provided the legal support to use cost segregation studies for computing depreciation. In effect, this decision has reinstated a form of component depreciation.
In HCA, the Service took the position that certain property items were structural components of a building and that ง 168(f)(1) prohibited the use of a component depreciation method for computing depreciation on buildings (including structural components). However, Judge Wells ruled that the property at issue was ง 1245 property and rejected the Service’s argument. Accordingly, the court determined that ง168(f)(1), prohibiting component depreciation, applied only to ง1250 property.
The HCA ruling effectively reinstated a form of component depreciation for certain building support systems, such as the electrical and plumbing systems that directly serve tangible personal property. Therefore, cost segregation methodologies previously used to allocate the cost of a building between structural components and ITC property can now be used for ง 1245 and ง 1250 property.
CHIEF COUNSEL GUIDANCE (on method of accounting)
Chief Counsel issued further guidance to the field in the form of an advice memorandum dated May 28, 1999. One observation was -- a change in depreciation method is a change in method of accounting, requiring the consent of the Secretary or his delegate.
[Note, however, that the recent 5th Circuit opinion in Brookshire Brothers Holding, Inc. & Subsidiaries v. Commissioner, 320 F.3d 507 (5th Cir. 2003), aff’g T.C. Memo. 2001-150, reh’g denied (March 31, 2003), which was adverse to the Service, may impact cases in that circuit. The court affirmed the Tax Court decision that the regulations allow taxpayers to make temporal changes in their depreciation schedules, as well as changes in the classification of property, without the consent of the IRS. However, the 10th Circuit opinion in Kurzet v. Commissioner, 222 F.3d 830 (10th Cir. 2000), was favorable to the government on this issue. Clearly, the issue is unsettled. However, Treas. Reg. ง 1.446-1T(e)(2)(ii)(d)(2)(i), effective for taxable years ending on or after December 30, 2003, provides that a change in the depreciation or amortization method, period of recovery, or convention of a depreciable or amortizable asset is a change in method of accounting.
In general, it is the position of the Service that a change in depreciation method, recovery period, or convention for depreciable property resulting from the reclassification of property is a change in accounting method. Such a change requires the consent of the Commissioner (i.e., the taxpayer must generally file Form 3115, Application for Change in Accounting Method) and the adjustment to income is made pursuant to IRC ง 481(a). Accordingly, claims for adjustment based on a cost segregation study performed after the original return was filed should not be allowed (i.e., unless a Form 3115 has been filed).
The issue of whether or not changes in depreciation methods, conventions, or recovery periods constitute accounting method changes is unsettled due to conflicting court opinions. However, Treas. Reg. ง 1.446-1T(e)(2)(ii)(d)(2)(i) and Example 9 of Treas. Reg. ง 1.446-1T(e)(2)(iii), effective for taxable years ending on or after December 30, 2003, provide that they do constitute changes in method of accounting.
Taxpayers may conduct a cost segregation study on used property and then recompute its depreciation deductions for prior years.
Service Position on Method of Accounting
In general, it is the position of the Service that in the year an asset is placed in service, an accounting method is adopted relative to the depreciation method, recovery period, or convention for the depreciable property. In any subsequent year from the placed-in-service year, a change in depreciation method, recovery period, or convention resulting from a reclassification of such property, results in a change in method of accounting. Such a change requires the consent of the Commissioner (i.e., the taxpayer must generally file Form 3115, Application for Change in Accounting Method), and the adjustment to income is made pursuant to IRC ง 481(a). If a taxpayer has adopted a method of accounting, the taxpayer may not change the method by amending its prior income tax returns. See Rev. Rul. 90-38, 1990-1 C.B. 57. Accordingly, amended returns or claims for adjustment, based on a cost segregation study performed after the original return was filed (for the placed-in-service year), should generally be disallowed on the basis that the taxpayer is attempting to make a retroactive method change.
LOOK-BACK STUDIES
The correct procedure for a taxpayer to change its accounting method is the timely filing of Form 3115, Request for Change in Accounting Method. Pursuant to Revenue Procedure 2002-9, 2002-3 I.R.B. 327, a taxpayer may request automatic consent for the change.
It is the position of the Service that a change in recovery period is a change in accounting method. Accordingly, a taxpayer is required to obtain the consent of the Commissioner by filing a timely Form 3115.
LACK OF BRIGHT-LINE TESTS FOR DISTINGUISHING ง 1245 AND ง 1250 PROPERTY
A myriad of court cases has addressed the classification of property for ITC purposes. All of the cases are factually-intensive and quite often the opinions of the courts conflict. In addition, though the Service has issued numerous revenue rulings to address specific fact patterns, no bright-line tests have evolved.
In order to calculate depreciation for Federal income tax purposes, taxpayers must use the correct method and proper recovery period for each asset or property owned. Property often consists of numerous asset types with different recovery periods, which must be separated into individual components or asset groups having the same recovery periods and placed-in-service dates.
When the actual cost of each individual component is available, this is a rather simple procedure. However, when only lump-sum costs are available, cost estimating techniques may be required to “segregate” or “allocate” costs to individual components of property (e.g., land, land improvements, buildings, equipment, furniture and fixtures, etc.). This type of analysis is generally called a “cost segregation study,” “cost segregation analysis,” or “cost allocation study.”
Significant tax benefits may be derived from utilizing shorter recovery periods. The issues for Internal Revenue Service Examiners (Service Examiners) are 1) the rationale used to segregate property into its various components, and 2) the methods used to allocate the total project costs among these components.
The most common situation is the allocation or reallocation of building costs to tangible personal property. A building, termed "section (ง) 1250 property", is generally 39-year property eligible for straight-line depreciation. Equipment, furniture and fixtures, termed "section (ง) 1245 property", are tangible personal property. Tangible personal property has a short recovery period, thus, a faster depreciation write-off (and tax benefit).
Property allocations and reallocations are typically based on criteria established under the Investment Tax Credit (ITC). In a recent landmark decision, the Tax Court ruled that, to the extent tangible personal property is included in an acquisition or in overall costs, it should be treated as such for depreciation purposes. The court also decided that the rules for determining whether property qualifies as tangible personal property for purposes of ITC (under pre-1981 tax law) are also applicable to determining depreciation under current law. [See Hospital Corporation of America, 109 T.C. 21 (1997)] The Service acquiesced to the use of ITC rules for distinguishing ง 1245 property from ง 1250 property.
OVERVIEW
It is important to review the relevant legal history and the motivations of taxpayers to allocate costs to personal property. The legislative and judicial history of depreciation, depreciation recapture, and Investment Tax Credit (ITC) are closely related.
The Internal Revenue Code (IRC) has historically authorized depreciation as an allowance for the exhaustion, wear and tear, and obsolescence of property used in a trade or business or for the production of income (IRC Sec. 167 and the regulations thereunder.)
BULLETIN F
For example, IRS Publication Number 173 (also known as "Bulletin F") was published in 1942 and provided a useful life guide for various types of property based on the nature of a taxpayer's business or industry. Bulletin F identified over 5,000 assets used in 57 different industries and activities and described two procedures for computing depreciation for buildings:
Composite Method: A depreciation chart provided a composite rate for buildings, including all installed building equipment.
Component Method: Taxpayers could elect to depreciate the building equipment separately from the structure itself.
COMPONENT DEPRECIATION
In 1959, the Tax Court recognized the right of taxpayers to calculate depreciation using a component method for newly constructed property [Shainberg vs. Commissioner, 33 T.C. 241 (1959)].
Revenue Procedure 62-21, 1962-2 C.B. 418, superceded Bulletin F and provided safe harbor useful lives based on industry-specific asset classes for taxpayers that met the reserve ratio test (a complex provision).
Revenue Ruling 66-111, 1966-1 C.B. 46 (subsequently modified by Revenue Ruling 73-410, 1973-2 C.B. 53), addressed the use of component depreciation for used real property, in light of the decision in Shainberg. The ruling concluded that “When a used building is acquired for a lump sum consideration, separate components are not bought; a unified structure is purchased… Accordingly, an overall useful life for the building must be determined on the basis of the building as a whole.”
Revenue Ruling 68-4,1968-1 C.B. 77, concluded that the asset guideline classes outlined in Revenue Procedure 62-21 “…may only be used where all the assets of the guideline class (building shell and its components) are included in the same guideline class for which one overall composite life is used for computing depreciation.”
ASSET DEPRECIATION RANGE (ADR)
The elective ADR system, implemented by Revenue Procedure 72-10, 1972-1 C. B. 721, was developed for tangible assets placed in service after 1970. All tangible assets were placed in one of the more than 100 asset guideline classes (which generally corresponded to those set out in Rev. Proc. 62-21). The classes of assets were based on the business and industry of the taxpayer. In addition, each class of assets other than land improvements and buildings was given a range of years (called "asset depreciation range") that was about 20 percent above and below the class life.
If the taxpayer did not elect the ADR system, Revenue Ruling 73-410, 1973-2 C.B. 53, clarified that a taxpayer may utilize the component method of depreciating used property if a qualified appraiser "…properly allocates the costs between non-depreciable land and depreciable building components as of the date of purchase."
ACCELERATED COST RECOVERY SYSTEM (ACRS)
Congress enacted IRC Sec. 168 I 1981. The ACRS was intended to provide a less complicated method for computing depreciation (known as “cost recovery” by eliminating salvage value and specifying recovery periods of various classes of assets. In contrast to the elective ADR system, ACRS was mandatory and provided only five (later six) recovery periods. ACRS also allowed for a faster write-off of assets than had been allowed under previous rules.
MODIFIED ACCELERATED COST RECOVERY SYSTEM (MACRS)
Significant modifications, generally less favorable to taxpayers, were made to ACRS by the Tax Reform ACT of 1986 (effective for property placed in service after December 31, 1986). Under the Modified Accelerated Cost Recovery System, the recovery period for buildings and structural components increased dramatically.
Revenue Procedure 87-56, 1987-2 C.B. 674, provides the class lives and recovery periods for most MACRS assets. These determinations are based on the specific industry of a taxpayer and the specific activity for which the assets are used.
EXPENSING PROVISIONS AND BONUS DEPRECIATION
Another incentive for allocating costs to shorter-lived property is the expensing provision of IRC Sec. 179. By maximizing the costs allocable to tangible personal property, the taxpayer can not only get an immediate write-off under ง 179, but also qualifies for a shorter recovery period under ง 168. Also, the 30-percent additional first year bonus depreciation allowance pursuant to ง 168(k), enacted by the Job Creation and Worker Assistance Act of 2002 (Public Law 107-147), provides even further incentive for taxpayers to segregate property into shorter recovery periods. The Jobs and Growth Reconciliation Tax Act of 2003 recently increased the bonus depreciation under ง 168(k) to 50 percent for certain qualifying property acquired after May 5, 2003, and placed in service before January 1, 2006. Section 1400L provides special rules for qualifying property used by a business in the New York Liberty Zone.
INVESTMENT TAX CREDIT - IRC ง 48
In order to stimulate the economy, Congress enacted Code ง 48 in 1962. The ITC was designed to encourage the modernization and expansion of productive facilities through the purchase of certain new or used assets for use in a trade or business. Over the years, many other changes were made to the rules, including reductions in the depreciable basis of property for which ITC was claimed, temporary suspensions, termination, reinstatement, and, ultimately, the general repeal of ITC in 1986.
TANGIBLE PERSONAL PROPERTY
Eligible ITC property is defined in former IRC ง 48(a)(1) with reference to IRC ง 38 (in fact, eligible property is often referred to as "section 38 property"). It included tangible personal property that was closely integrated into the taxpayer's trade or business. Land, buildings, structural components contained in or attached to buildings, and other inherently permanent structures, generally were not eligible for ITC.
SECTION 1245 AND SECTION 1250 PROPERTY
The benefits of the ITC were somewhat offset by the provisions of IRC Sec. 1245 and 1250, also enacted in 1962. These Code sections result in the conversion of capital gain to ordinary income on the disposition of a property, to the extent its basis has been reduced by an accelerated depreciation method. The definitions of property for purposes of Sec. 1245 and 1250 are very similar to that for ITC and make reference to the regulations under Sec. 48 and the definitions under Sec. 38 property. These interrelated Code sections and the regulations (38, 48, 1245 and 1250) provide the pertinent authority for determining eligibility for ITC.
The primary issue in cost segregation studies is the proper classification of assets as either ง 1245 or ง 1250 property. Accordingly, the ITC rules are critical in determining whether a taxpayer has classified property into the appropriate asset class.
INHERENT PERMANENCY TEST AND THE “WHITECO FACTORS”
Revenue Ruling 75-178, 1975-1 C.B.9 outlined several criteria to determine Sec. 1245 property classification. The classic pronouncement addressing inherent permanency was Whiteco Industries, Inc. v. Commissioner, 65 T.C. 664, 672-673 (1975). The Tax Court, based on an analysis of judicial precedent, developed six questions designed to ascertain whether a particular asset qualifies as tangible personal property. The questions were referred to as the “Whiteco Factors.”
It should also be noted, however, that movability is not the only determinative factor in measuring inherent permanency. In L.L. Bean, Inc. v. Comm., T.C. Memo, 1997-175, aff’d, 145 F.3d 53 (1st Cir. 1998), it was determined that, even though the structure could be moved, it was designed to remain permanently in place. Thus, it was determined to be an inherently permanent structure.
REPEAL OF ITC AND COMPONENT DEPRECIATION
Due to the significant tax benefits derived from ITC-eligible property, the use of component depreciation proliferated during the 1970's and created problems not unlike those faced today by taxpayers, practitioners, and the Service regarding cost segregation studies. The problem became so pronounced during the late 1970’s that Congress disallowed component depreciation as a method of computing depreciation for buildings, simultaneously with the enactment of ACRS in the Economic Recovery Tax Act of 1981 (ERTA) [see IRC ง 168(f)(1)].
In 1986, MACRS reiterated that the use of component depreciation was not allowable.
HOSPITAL CORPORATION OF AMERICA v. COMMISSIONER ("HCA") (1997)
A landmark decision, Hospital Corporation of America v. Commissioner, 109 T.C. 21 (1997)("HCA"), provided the legal support to use cost segregation studies for computing depreciation. In effect, this decision has reinstated a form of component depreciation.
In HCA, the Service took the position that certain property items were structural components of a building and that ง 168(f)(1) prohibited the use of a component depreciation method for computing depreciation on buildings (including structural components). However, Judge Wells ruled that the property at issue was ง 1245 property and rejected the Service’s argument. Accordingly, the court determined that ง168(f)(1), prohibiting component depreciation, applied only to ง1250 property.
The HCA ruling effectively reinstated a form of component depreciation for certain building support systems, such as the electrical and plumbing systems that directly serve tangible personal property. Therefore, cost segregation methodologies previously used to allocate the cost of a building between structural components and ITC property can now be used for ง 1245 and ง 1250 property.
CHIEF COUNSEL GUIDANCE (on method of accounting)
Chief Counsel issued further guidance to the field in the form of an advice memorandum dated May 28, 1999. One observation was -- a change in depreciation method is a change in method of accounting, requiring the consent of the Secretary or his delegate.
[Note, however, that the recent 5th Circuit opinion in Brookshire Brothers Holding, Inc. & Subsidiaries v. Commissioner, 320 F.3d 507 (5th Cir. 2003), aff’g T.C. Memo. 2001-150, reh’g denied (March 31, 2003), which was adverse to the Service, may impact cases in that circuit. The court affirmed the Tax Court decision that the regulations allow taxpayers to make temporal changes in their depreciation schedules, as well as changes in the classification of property, without the consent of the IRS. However, the 10th Circuit opinion in Kurzet v. Commissioner, 222 F.3d 830 (10th Cir. 2000), was favorable to the government on this issue. Clearly, the issue is unsettled. However, Treas. Reg. ง 1.446-1T(e)(2)(ii)(d)(2)(i), effective for taxable years ending on or after December 30, 2003, provides that a change in the depreciation or amortization method, period of recovery, or convention of a depreciable or amortizable asset is a change in method of accounting.
In general, it is the position of the Service that a change in depreciation method, recovery period, or convention for depreciable property resulting from the reclassification of property is a change in accounting method. Such a change requires the consent of the Commissioner (i.e., the taxpayer must generally file Form 3115, Application for Change in Accounting Method) and the adjustment to income is made pursuant to IRC ง 481(a). Accordingly, claims for adjustment based on a cost segregation study performed after the original return was filed should not be allowed (i.e., unless a Form 3115 has been filed).
The issue of whether or not changes in depreciation methods, conventions, or recovery periods constitute accounting method changes is unsettled due to conflicting court opinions. However, Treas. Reg. ง 1.446-1T(e)(2)(ii)(d)(2)(i) and Example 9 of Treas. Reg. ง 1.446-1T(e)(2)(iii), effective for taxable years ending on or after December 30, 2003, provide that they do constitute changes in method of accounting.
Taxpayers may conduct a cost segregation study on used property and then recompute its depreciation deductions for prior years.
Service Position on Method of Accounting
In general, it is the position of the Service that in the year an asset is placed in service, an accounting method is adopted relative to the depreciation method, recovery period, or convention for the depreciable property. In any subsequent year from the placed-in-service year, a change in depreciation method, recovery period, or convention resulting from a reclassification of such property, results in a change in method of accounting. Such a change requires the consent of the Commissioner (i.e., the taxpayer must generally file Form 3115, Application for Change in Accounting Method), and the adjustment to income is made pursuant to IRC ง 481(a). If a taxpayer has adopted a method of accounting, the taxpayer may not change the method by amending its prior income tax returns. See Rev. Rul. 90-38, 1990-1 C.B. 57. Accordingly, amended returns or claims for adjustment, based on a cost segregation study performed after the original return was filed (for the placed-in-service year), should generally be disallowed on the basis that the taxpayer is attempting to make a retroactive method change.
LOOK-BACK STUDIES
The correct procedure for a taxpayer to change its accounting method is the timely filing of Form 3115, Request for Change in Accounting Method. Pursuant to Revenue Procedure 2002-9, 2002-3 I.R.B. 327, a taxpayer may request automatic consent for the change.
It is the position of the Service that a change in recovery period is a change in accounting method. Accordingly, a taxpayer is required to obtain the consent of the Commissioner by filing a timely Form 3115.
LACK OF BRIGHT-LINE TESTS FOR DISTINGUISHING ง 1245 AND ง 1250 PROPERTY
A myriad of court cases has addressed the classification of property for ITC purposes. All of the cases are factually-intensive and quite often the opinions of the courts conflict. In addition, though the Service has issued numerous revenue rulings to address specific fact patterns, no bright-line tests have evolved.
Spanish Property: The Facts You Need To Know
Buying property has all of its attendant headaches. There are so many negotiations, legal issues, volatile market prices, mortgages and real estate agencies that you have to contend with and negotiate that it would most likely overwhelm you. Now imagine buying property in another country and what was already big headache is further complicated by other factors. Aside from the usual difficulties you now have to contend with language differences, different market practices as well as unique tax burdens. It is a wonder at all that people still want to buy properties in other countries.
But if the property you will buy is exquisitely beautiful, just like the available properties in Spain, then everything is worth it. What’s more, buying Spanish property is not as difficult as in other countries, making the already alluring prospect actually realistic.
According to a recently held survey by Barclays Bank, up to 4.4 million Britons are willing to buy Spanish property. With Spain’s very strong consumer protection laws as well as safeguards imposed on its property industry, more and more buyers are being assured that investing in a Spanish property is a good, hassle-free decision. And despite negative media coverage on some property-related problems in Spain, an overwhelming 92 percent of families are still considering buying Spanish property. These are sure signs of the consumers’ confidence for Spain’s property industry.
The imposition of many buyer-friendly measures is having positive effects on the Spanish property selling environment. One prominent measure that has boosted buyer confidence is a guarantee provided by Spanish developers that a buyer’s deposit for offplan houses can be refunded if the developers do not take delivery. Another positive measure is that all defects are insured for ten years. These are all incorporated into the latest consumer protection laws.
Of course, even if the environment for buying Spanish property is steadily growing more and more ideal for overseas buyers, there are still some pitfalls that must be considered. The most common problem that buyers of Spanish property face is overpricing. It is not uncommon to hear buyers complaining that a bungalow that they have set their sights on is priced like a palacio. When faced with this dilemma, buyers are advised to become more like sleuths and not like buyers. It is always a good idea to do research first and look around so that they can have a feel for the prevailing market conditions and prices.
It is also a good move to hire a reputable real estate agent in Spain who will help you look for, and negotiate with, sellers for the Spanish property you are eyeing, Real estate agents would have a good idea of the fair market price for various Spanish property. The added benefit of hiring a real estate agent is that you won’t have to worry about the language barrier anymore. Your real estate agent will handle all of the negotiations and most of the paperwork and make ownership of your Spanish property hassle-free.
But if the property you will buy is exquisitely beautiful, just like the available properties in Spain, then everything is worth it. What’s more, buying Spanish property is not as difficult as in other countries, making the already alluring prospect actually realistic.
According to a recently held survey by Barclays Bank, up to 4.4 million Britons are willing to buy Spanish property. With Spain’s very strong consumer protection laws as well as safeguards imposed on its property industry, more and more buyers are being assured that investing in a Spanish property is a good, hassle-free decision. And despite negative media coverage on some property-related problems in Spain, an overwhelming 92 percent of families are still considering buying Spanish property. These are sure signs of the consumers’ confidence for Spain’s property industry.
The imposition of many buyer-friendly measures is having positive effects on the Spanish property selling environment. One prominent measure that has boosted buyer confidence is a guarantee provided by Spanish developers that a buyer’s deposit for offplan houses can be refunded if the developers do not take delivery. Another positive measure is that all defects are insured for ten years. These are all incorporated into the latest consumer protection laws.
Of course, even if the environment for buying Spanish property is steadily growing more and more ideal for overseas buyers, there are still some pitfalls that must be considered. The most common problem that buyers of Spanish property face is overpricing. It is not uncommon to hear buyers complaining that a bungalow that they have set their sights on is priced like a palacio. When faced with this dilemma, buyers are advised to become more like sleuths and not like buyers. It is always a good idea to do research first and look around so that they can have a feel for the prevailing market conditions and prices.
It is also a good move to hire a reputable real estate agent in Spain who will help you look for, and negotiate with, sellers for the Spanish property you are eyeing, Real estate agents would have a good idea of the fair market price for various Spanish property. The added benefit of hiring a real estate agent is that you won’t have to worry about the language barrier anymore. Your real estate agent will handle all of the negotiations and most of the paperwork and make ownership of your Spanish property hassle-free.
Sell Your Own Home
You can sell your own home, but it can be a time-consuming and frustrating process. Usually I would recommend listing with an agent, but in the right market, it may make sense to save the commission and do it yourself. If you try, use the tips here to do it right, and to avoid common mistakes.
1. Understand house values. It's not what you think your house is worth, and it doesn't matter how much you put into it. The value is only what it's worth to potential buyers. See what they've paid for similar homes before you decide on a price.
2. Try to be objective. Get your most honest and open friend to walk through the house with you. He or she will see problems you didn't even know were problems.
3. Make a plan. What will your kids say to those who call? Where will you close? Will your documents be prepared by an attorney? Plan well, and it will all go smoother.
4. Start a list. What needs to be repaired, cleaned, changed, or removed? Always do the most obvious things first.
5. Prepare to sell. List questions a buyer might have, and be ready with answers. Prepare comparison sheets showing other home sales, so buyers can see the value. Make a map showing nearby stores and libraries, etc.
6. Sell the benefits, not the features. Never say "near stores." Instead, say "You can walk to the store in five minutes." Don't just say "garage." Try "No chipping ice off the windshield in the morning."
7. Put all important information in ads. Include the square feet, number of bedrooms and bathrooms, address, telephone number, and price. Leave out the price and some buyers just won't call, plus you'll waste time with others who shouldn't be calling.
8. Listen to buyers. One mistake sellers make talking to buyers is to get defensive about their home. Listen to the criticisms, and resolve them or ask how important the issue is to the buyer. In other words, try to learn a little about selling.
9. Have a clear sales agreement. Be sure it's understood by both sides. What happens, and when? What if the buyer doesn't get financing? What's included with the sale? When will the buyer take possesion? Who pays the closing fee and the transfer tax?
10. Make closing easy. Have documents ready to sign. Prepare answers to likely questions. This may be the largest financial transaction in your buyer's life, so make him comfortable.
There's more than can be covered in ten tips, of course. Use these however, and you'll be doing better than the average seller when you sell your own home.
1. Understand house values. It's not what you think your house is worth, and it doesn't matter how much you put into it. The value is only what it's worth to potential buyers. See what they've paid for similar homes before you decide on a price.
2. Try to be objective. Get your most honest and open friend to walk through the house with you. He or she will see problems you didn't even know were problems.
3. Make a plan. What will your kids say to those who call? Where will you close? Will your documents be prepared by an attorney? Plan well, and it will all go smoother.
4. Start a list. What needs to be repaired, cleaned, changed, or removed? Always do the most obvious things first.
5. Prepare to sell. List questions a buyer might have, and be ready with answers. Prepare comparison sheets showing other home sales, so buyers can see the value. Make a map showing nearby stores and libraries, etc.
6. Sell the benefits, not the features. Never say "near stores." Instead, say "You can walk to the store in five minutes." Don't just say "garage." Try "No chipping ice off the windshield in the morning."
7. Put all important information in ads. Include the square feet, number of bedrooms and bathrooms, address, telephone number, and price. Leave out the price and some buyers just won't call, plus you'll waste time with others who shouldn't be calling.
8. Listen to buyers. One mistake sellers make talking to buyers is to get defensive about their home. Listen to the criticisms, and resolve them or ask how important the issue is to the buyer. In other words, try to learn a little about selling.
9. Have a clear sales agreement. Be sure it's understood by both sides. What happens, and when? What if the buyer doesn't get financing? What's included with the sale? When will the buyer take possesion? Who pays the closing fee and the transfer tax?
10. Make closing easy. Have documents ready to sign. Prepare answers to likely questions. This may be the largest financial transaction in your buyer's life, so make him comfortable.
There's more than can be covered in ten tips, of course. Use these however, and you'll be doing better than the average seller when you sell your own home.
Searching For A Home In Beautiful Boise
Boise, the state capital of Idaho, is currently experiencing a population boom thanks to its temperate climate, business friendly environment, and family favorable atmosphere. Indeed, most of the dramatic growth that is happening is made evident in the city's surging population base which has pushed past the 200,000 mark. If you are a current Boise resident or you are considering searching for a home in Idaho's largest city or in its surrounding towns, you can conduct a Boise home search right from the comfort of your personal computer. Read on and we'll examine some of the ways you can tap into the rich Boise real estate market.
French for "wooded area" Boise continues to exemplify its nickname as the "city of trees." This bucolic living, working, and recreational environment continues to hold visitors' attention and is one of the reasons why families are relocating to the area in large numbers.
If you are considering purchasing Boise real estate you can perform a Boise home search online to uncover what you need to know about this booming market. Simply enter "Boise real estate" or "Boise home search" within your search parameters and a whole host of results will pop up. Likely, you will find enough information on the first 2 or 3 pages of your results to give you an idea about Boise real estate agents, mortgage brokers, financing institutions, and more. Bookmark those sites with a strong presence in the Boise area to find someone who truly understands the local market.
When contacting a realtor, make certain that the person is licensed by the state of Idaho and is, in fact, a realtor. You want someone who not only meets industry standards, but exceeds them. Your Boise home search can best be helped by someone who is a licensed realtor.
As with any professional, interview them first before choosing the agent you feel comfortable working with. Licensing, experience, market knowledge, and community credibility should all factor in to your decision. The Boise real estate market is growing, but you cannot assume that every professional is the best one for you.
Once you have found the professional that you want, ask for as much detailed information about the area especially if you are considering relocating. Arrange a visit to Boise and have the realtor drive you around to the neighborhoods which are in your price range. The more legwork you do ahead of time, the easier your Boise home search will be.
Yes, the Boise real estate market is hot. Still, prices are quite reasonable and are likely to grow over the long term. Begin tapping into the Boise real estate market today by conducting your Boise home search right online!
French for "wooded area" Boise continues to exemplify its nickname as the "city of trees." This bucolic living, working, and recreational environment continues to hold visitors' attention and is one of the reasons why families are relocating to the area in large numbers.
If you are considering purchasing Boise real estate you can perform a Boise home search online to uncover what you need to know about this booming market. Simply enter "Boise real estate" or "Boise home search" within your search parameters and a whole host of results will pop up. Likely, you will find enough information on the first 2 or 3 pages of your results to give you an idea about Boise real estate agents, mortgage brokers, financing institutions, and more. Bookmark those sites with a strong presence in the Boise area to find someone who truly understands the local market.
When contacting a realtor, make certain that the person is licensed by the state of Idaho and is, in fact, a realtor. You want someone who not only meets industry standards, but exceeds them. Your Boise home search can best be helped by someone who is a licensed realtor.
As with any professional, interview them first before choosing the agent you feel comfortable working with. Licensing, experience, market knowledge, and community credibility should all factor in to your decision. The Boise real estate market is growing, but you cannot assume that every professional is the best one for you.
Once you have found the professional that you want, ask for as much detailed information about the area especially if you are considering relocating. Arrange a visit to Boise and have the realtor drive you around to the neighborhoods which are in your price range. The more legwork you do ahead of time, the easier your Boise home search will be.
Yes, the Boise real estate market is hot. Still, prices are quite reasonable and are likely to grow over the long term. Begin tapping into the Boise real estate market today by conducting your Boise home search right online!
Friday, November 28, 2008
Appealing Property Taxes for Apartment Owners
Property taxes are one of the largest line item costs incurred by apartment owners. However, many owners do not appeal effectively. Even though owners realize that property taxes can be managed and reduced through an appeal, some view taxes as an arbitrary estimate provided by the government which can't effectively be appealed. It tends to boil down to the old adage, "You can't fight city hall".
Fortunately, the property tax appeal process in Texas provides owners multiple opportunities to appeal. Handled either directly by the owner or by a property tax consultant, this process should involve an intense effort to annually appeal and minimize property taxes. Reducing the largest line item expense has a significant effect in reducing the owner's overall operating expenses. While it is not possible to entirely escape the burden of paying property taxes, it is possible to reduce taxes sharply, often by 25% to 50%.
Why some owners don't appeal
Some property owners don't appeal because they either don't understand the process, or don't understand that there is a good probability of achieving meaningful reductions in property taxes. Some owners believe that since the market value of their property exceeds the assessed value, then it is not possible to appeal and reduce the property taxes. Although appeals on unequal appraisal are relatively new, there is a clear-cut way to appeal property taxes at the administrative hearing level based on unequal appraisal. Unequal appraisal occurs when property is assessed inconsistently with neighboring properties or comparable properties. Also, some owners are reluctant to hire a property tax consultant, even though many consultants will work on a contingent fee basis, in which there is no cost to the owner unless property taxes for the current year are reduced.
Overview of appeal process
The following are the primary steps in the annual process for appealing property taxes:
ท Request notice of accessed value
ท File an appeal
ท Prepare for hearing
. Review records
. Review market value appeal
. Review unequal appraisal appeal
ท Set negotiating perimeters
ท Administrative hearings
ท Decide whether binding arbitration or judicial appeals are warranted
ท Pay taxes timely
Requesting a notice of assessed value
Property owners have the option of requesting a notice of assessed value for their property annually. Section 25.19g of the Texas Property Tax Code provides the owner the option to request a written notice of the assessed value from the chief appraiser. Owners benefit from requesting and receiving a written notice of assessed value for each property because it ensures they have an opportunity to review the assessed value. This notice should be sent on an annual basis. The appraisal district does not have to send a notice of assessed value if the value increases by less than $1,000. However, if an owner was not satisfied with a prior year's value and the value remained the same, the appraisal district probably will not send a notice of the assessed value for the current year. In this situation, the owner might forget to protest since a notice of assessed value for the property was not received.
How to file and appeal
On or before May 31st of each year, the property owner should file an appeal for each property. However, while many owners are comfortable with an assessed value, in many cases there is a basis for appealing. Two options for appealing include:
1. unequal appraisal, and
2. market value based on data the appraisal district provides to the owner before the hearing.
You can appeal by completing the protest form provided by the appraisal district and indicating both excessive value (market value) and unequal appraisal as the basis for appeal. In addition, the property owner can simply send a notice that identifies the property, and indicates dissatisfaction with some determination of the appraisal office. The notice does not need to be on an official form, although the comptroller does provide a form for the convenience of property owners. (You can access the protest form at www.cutmytaxes.com .)
House Bill 201 - helpful information
House Bill 201 is the industry jargon for a property owner's option to request information the appraisal district will use at the hearing, and to receive a copy 14 days before the hearing. The name House Bill 201 is derived from the bill used to enact the law. The details for House Bill 201 are located in sections 41.461 and 41.67d of the Texas Property Tax Code. When filing a protest, the property owner should additionally request in writing that the appraisal district provide a copy of any information the appraisal district plans to introduce at the hearing. The appraisal district will typically require the property owner to come to the appraisal district office to pick up the information and charge a nominal fee, typically $0.10 per page. While the cost for House Bill 201 requests are quite low (typically $0.50 to $2.00 per property for residential and commercial) the information is invaluable in preparing for the hearing. In addition, filing a House Bill 201 request is important because it limits the information the appraisal district can present at the hearing to what was provided to the property owner two weeks before the hearing.
Preparing for the Hearing
Start by reviewing the appraisal district's information for your property for accuracy. If the appraisal district overstates either the quality or quantity of improvements, this will justify a deduction. The next step is to review the information on market value and unequal appraisal provided by the appraisal district in the House Bill 201 package. If the subject property is an income property, review the appraisal district's income analysis versus your actual income and expense statements. Consider the following areas as opportunities to rebut the appraisal district's analysis:
ท Gross potential income
ท Vacancy rate
ท Total effective gross income, including other income
ท Operating expenses
ท Amount of replacement reserves
ท Net operating income
ท Capitalization rate
ท Final market value
Many property owners and consultants start with the actual income and expense data, and use one or two of the assumptions provided by the appraisal district. However, they primarily utilize information from the actual income and expenses in preparing their own income analysis and estimate of market value for the subject property.
When comparable sales are the primary issue in determining market value, start by reviewing the comparable sales data provided by the appraisal district versus the assessed value for your property. Convert the sales prices from the appraisal district to either a per square foot or per unit basis. Then compare the sales to the per square foot or per unit assessment for your property. Sales can be helpful during the hearing.
The cost approach is not typically used in the property tax hearings except for brand new or relatively new properties. If your property is new, the appraisal district will probably want to review the cost information and you probably won't want to show it to them. In many cases, the actual cost of a property is higher than the estimate provided by the appraisal district. If this is the case, you will likely want to appeal on unequal appraisal instead of on market value. No matter how good your argument or how passionately it is expressed, the appraisal district staff and Appraisal Review Board (ARB) members tend to believe that cost equals value for new properties.
Deferred Maintenance and Functional Obsolescence
Another issue that is important for the market value appeal, and to some extent for a unequal appraisal appeal, is information on deferred maintenance and functional obsolescence. Deferred maintenance could include items such as:
ท rotten wood
ท peeling paint
ท roof replacement
ท substantial repair
ท landscaping updating and other similar items
Most appraisal districts give minimal consideration to requests for adjustments based on deferred maintenance, unless the property owner provides repair costs from independent contractors. There are some exceptions where a cooperative informal appraiser or sympathetic ARB will take an owner's estimate of deferred maintenance and make adjustments based on those costs. Most appraisers and ARB members are much more inclined to make adjustments if third-party cost estimates are provided. In addition, the appraisers and many ARB members are inclined to only deduct a portion of the total cost using the argument, "we've been giving a replacement reserve allowance for this item for the past years and it'd be double-dipping to deduct the whole value off it in the current year." While this is an incorrect appraisal argument, it does tend to be the practice at many appraisal districts. The reality is, the cost of curing deferred maintenance is deducted from the offer by a prospective buyer.
Examples of functional obsolescence would be a three-bedroom apartment unit that only has one bathroom, or a two-bedroom apartment that does not have washer/dryer connections in an area where those connections are common. Another example would be an apartment that has a window air conditioner in an area where central HVAC is typical and expected.
Unequal appraisal analysis
The Texas Property Tax Code, section 41.43(b)(3), provides for appraising or appealing on unequal appraisal including ratio studies and "a reasonable number of comparable properties appropriately adjusted." Virtually all unequal appraisal appeals involve a reasonable number of comparables that are appropriately adjusted. Comparables are similar properties.
This is primarily because of the difficulty and cost of performing a ratio study. Historically, the position of many appraisal districts was that the property owner needed to get a fee appraisal for each comparable property and compare the market value estimated by the appraiser to the assessed value. The cost of getting multiple appraisals made this process financially impractical. Compiling a reasonable number of comparables appropriately adjusted is simple and straightforward. The first step is to choose a reasonable number of comparables. Usually four to five comparables is the typical number used at a property tax hearing, but in some cases, property owners choose ten to thirty. In some cases, there may only be one to four comparable properties that merit consideration. Most unequal appraisal presentations include three to ten comparables. The number of reasonable comparables depends on the location, type, size and age of the property. For example, there would be fewer five-year-old bowling alleys in the northern part of Harris County compared to recently built apartment complexes.
After choosing a reasonable number of comparables, array them in a table format, including fields of data such as account number, net rentable area, year built, street address, assessed value and assessed value per square foot.
You should also review the information in the appraisal district's House Bill 201 packet on an unequal appraisal. In many cases, the appraisal districts unequal appraisal analysis will document a reduction in your assessed value! If the appraisal districts unequal appraisal analysis documents a reduction, either the informal appraiser or the ARB should make the adjustment in assessed value for you. Having the opportunity to get an assessed value reduced automatically based on the appraisal districts unequal appraisal analysis is one of the reasons to appeal every property every year.
Completing Hearing Preparation
After reviewing the appraisal district's information on your property, the House Bill 201 package, and your market value and unequal appraisal analyses, determine the strengths and weaknesses of each approach and decide which basis of appeal provides the best opportunity for a meaningful reduction. Although appeals on unequal appraisal have clearly been the law of the land since 2003, some appraisal districts and review boards have chosen to disregard the option for unequal appraisal put forth by the Texas Legislature. Although there is litigation underway which should resolve this issue within the next year, it would be prudent to visit someone who is knowledgeable in local property tax appeals to determine whether the county appraisal district and ARB in your area are considering appeals on unequal appraisal.
Set Negotiating Perimeters
After reviewing the information, it is important to set the highest level of assessed value you will accept at the informal hearing because after you accept an assessed value, the appeal process will be complete for the year and you will not be able to appeal further.
Administrative Hearing Process
The two steps to the administrative hearing process are the informal hearing and the appraisal review board hearing.
The Informal Hearing
The following procedure and rules are typical at the informal hearing:
ท Meet with an appraiser representing the appraisal district. You should be polite and prepared at this meeting. While many property owners are frustrated and angry at the high level of real estate taxes, the appraisal district appraiser does not control the tax rate set by various entities nor the policy regarding property taxes in the area or the state. The appraisal district appraiser is trying to execute his job in a professional manner and appreciates it when property owners work with him on that basis.
ท Provide the appraiser information on your property and he will review that information and information he has available.
ท The appraiser will likely make an offer to settle the assessed value of your property fairly quickly. You can either accept the value or negotiate further. Either way, you should know within ten to twenty minutes whether the appraiser will offer an acceptable value. If the value is acceptable, conclude the negotiation by agreeing to the value for the current year. If the value offered is not acceptable, ask to go forward with an ARB hearing.
Appraisal Review Board Hearing (ARB)
The ARB hearing panel consists of three impartial citizens selected and paid by the appraisal district. The age of most ARB members ranges from fifty to eighty. There is an unfortunate bias in the system since the ARB members are selected and paid by the appraisal district, but most ARB members are reasonable people who want to make appropriate decisions.
Like the appraisal district appraiser, the ARB does not set tax rates or tax policy. The members are also not responsible for the effectiveness of local government. It is unlikely to help your case if you complain to the ARB members about either the high level of property taxes or the poor quality of some aspect of local government.
The ARB will expect you to make your presentation in about three to ten minutes. They will typically wait patiently while you make your presentation and may have questions after you conclude. An appraiser from the appraisal district, who may or may not be the same person who attended the informal hearing, will represent the appraisal district at the ARB hearing. The appraiser will comment on the evidence you presented and will often present other information the appraisal district has available. If you requested a House Bill 201 package for your property, it substantially limits the evidence the appraisal district appraiser can offer at the hearing. The ARB members may have questions after the appraisers presentation. Then the property owner will be given a final opportunity to rebut evidence presented by the appraisal district appraiser and quickly summarize the evidence. The ARB members strongly prefer you not repeat your entire presentation at this point.
After hearing the evidence, the ARB members will confer and make a decision. This decision is not subject to negotiation and they will not revise the decision if further evidence is presented. When this decision is announced, the hearing is effectively over. The ARB will send a letter two to four weeks later summarizing their decision and notifying the owner of a 45 day limitation from the date receipt of the ARB decision to either request binding arbitration or file a judicial appeal.
Binding Arbitration or Judicial Appeal
Beginning September 2005, owners of properties with an assessed value of $1 million or less may file a request for binding arbitration. The owner must file with the appraisal district no more than 45 days after receipt of the notice of the ARB's decision. The binding arbitration option is interesting because it includes a loser pays provision. The appraisal district pays for the arbitrator's fee if the final value is closer to the owner's opinion of value, and the owner pays for the binding arbitration if the final decision is closer to the appraisal district's opinion of value. Binding arbitration was passed to provide an alternative to judicial appeals, which can be expensive to prosecute.
Many owners pursue judicial appeals to further reduce property taxes. In 2005, O'Connor & Associates filed over 1,200 judicial appeals on behalf of property owners in the state of Texas. The judicial appeals can be expensive if the property owner and attorney don't understand the process and have a plan in place to minimize the cost of legal and expert witness fees. Judicial appeals are typically successful. However, success requires cooperation from the property owner, such as providing responses to questions, documents and a deposition if requested. The judicial appeal is meaningful as an option to minimize property taxes since it reduces the base value. This is important because the appraisal district and ARB consider the base value in the subsequent year when setting the administrative hearing value.
Conclusion
Property owners can generate substantial reductions in property taxes by appealing annually. Consider appeals on both market value and unequal appraisal and obtain the House Bill 201 information when preparing for the appeal hearing. Property owners should consider all three levels of appeal: informal hearing, ARB hearing and judicial appeal/binding arbitration. While the ARB hearing and judicial appeal/binding arbitration can be an intimidating process, each is straightforward once you understand the mechanics.
Fortunately, the property tax appeal process in Texas provides owners multiple opportunities to appeal. Handled either directly by the owner or by a property tax consultant, this process should involve an intense effort to annually appeal and minimize property taxes. Reducing the largest line item expense has a significant effect in reducing the owner's overall operating expenses. While it is not possible to entirely escape the burden of paying property taxes, it is possible to reduce taxes sharply, often by 25% to 50%.
Why some owners don't appeal
Some property owners don't appeal because they either don't understand the process, or don't understand that there is a good probability of achieving meaningful reductions in property taxes. Some owners believe that since the market value of their property exceeds the assessed value, then it is not possible to appeal and reduce the property taxes. Although appeals on unequal appraisal are relatively new, there is a clear-cut way to appeal property taxes at the administrative hearing level based on unequal appraisal. Unequal appraisal occurs when property is assessed inconsistently with neighboring properties or comparable properties. Also, some owners are reluctant to hire a property tax consultant, even though many consultants will work on a contingent fee basis, in which there is no cost to the owner unless property taxes for the current year are reduced.
Overview of appeal process
The following are the primary steps in the annual process for appealing property taxes:
ท Request notice of accessed value
ท File an appeal
ท Prepare for hearing
. Review records
. Review market value appeal
. Review unequal appraisal appeal
ท Set negotiating perimeters
ท Administrative hearings
ท Decide whether binding arbitration or judicial appeals are warranted
ท Pay taxes timely
Requesting a notice of assessed value
Property owners have the option of requesting a notice of assessed value for their property annually. Section 25.19g of the Texas Property Tax Code provides the owner the option to request a written notice of the assessed value from the chief appraiser. Owners benefit from requesting and receiving a written notice of assessed value for each property because it ensures they have an opportunity to review the assessed value. This notice should be sent on an annual basis. The appraisal district does not have to send a notice of assessed value if the value increases by less than $1,000. However, if an owner was not satisfied with a prior year's value and the value remained the same, the appraisal district probably will not send a notice of the assessed value for the current year. In this situation, the owner might forget to protest since a notice of assessed value for the property was not received.
How to file and appeal
On or before May 31st of each year, the property owner should file an appeal for each property. However, while many owners are comfortable with an assessed value, in many cases there is a basis for appealing. Two options for appealing include:
1. unequal appraisal, and
2. market value based on data the appraisal district provides to the owner before the hearing.
You can appeal by completing the protest form provided by the appraisal district and indicating both excessive value (market value) and unequal appraisal as the basis for appeal. In addition, the property owner can simply send a notice that identifies the property, and indicates dissatisfaction with some determination of the appraisal office. The notice does not need to be on an official form, although the comptroller does provide a form for the convenience of property owners. (You can access the protest form at www.cutmytaxes.com .)
House Bill 201 - helpful information
House Bill 201 is the industry jargon for a property owner's option to request information the appraisal district will use at the hearing, and to receive a copy 14 days before the hearing. The name House Bill 201 is derived from the bill used to enact the law. The details for House Bill 201 are located in sections 41.461 and 41.67d of the Texas Property Tax Code. When filing a protest, the property owner should additionally request in writing that the appraisal district provide a copy of any information the appraisal district plans to introduce at the hearing. The appraisal district will typically require the property owner to come to the appraisal district office to pick up the information and charge a nominal fee, typically $0.10 per page. While the cost for House Bill 201 requests are quite low (typically $0.50 to $2.00 per property for residential and commercial) the information is invaluable in preparing for the hearing. In addition, filing a House Bill 201 request is important because it limits the information the appraisal district can present at the hearing to what was provided to the property owner two weeks before the hearing.
Preparing for the Hearing
Start by reviewing the appraisal district's information for your property for accuracy. If the appraisal district overstates either the quality or quantity of improvements, this will justify a deduction. The next step is to review the information on market value and unequal appraisal provided by the appraisal district in the House Bill 201 package. If the subject property is an income property, review the appraisal district's income analysis versus your actual income and expense statements. Consider the following areas as opportunities to rebut the appraisal district's analysis:
ท Gross potential income
ท Vacancy rate
ท Total effective gross income, including other income
ท Operating expenses
ท Amount of replacement reserves
ท Net operating income
ท Capitalization rate
ท Final market value
Many property owners and consultants start with the actual income and expense data, and use one or two of the assumptions provided by the appraisal district. However, they primarily utilize information from the actual income and expenses in preparing their own income analysis and estimate of market value for the subject property.
When comparable sales are the primary issue in determining market value, start by reviewing the comparable sales data provided by the appraisal district versus the assessed value for your property. Convert the sales prices from the appraisal district to either a per square foot or per unit basis. Then compare the sales to the per square foot or per unit assessment for your property. Sales can be helpful during the hearing.
The cost approach is not typically used in the property tax hearings except for brand new or relatively new properties. If your property is new, the appraisal district will probably want to review the cost information and you probably won't want to show it to them. In many cases, the actual cost of a property is higher than the estimate provided by the appraisal district. If this is the case, you will likely want to appeal on unequal appraisal instead of on market value. No matter how good your argument or how passionately it is expressed, the appraisal district staff and Appraisal Review Board (ARB) members tend to believe that cost equals value for new properties.
Deferred Maintenance and Functional Obsolescence
Another issue that is important for the market value appeal, and to some extent for a unequal appraisal appeal, is information on deferred maintenance and functional obsolescence. Deferred maintenance could include items such as:
ท rotten wood
ท peeling paint
ท roof replacement
ท substantial repair
ท landscaping updating and other similar items
Most appraisal districts give minimal consideration to requests for adjustments based on deferred maintenance, unless the property owner provides repair costs from independent contractors. There are some exceptions where a cooperative informal appraiser or sympathetic ARB will take an owner's estimate of deferred maintenance and make adjustments based on those costs. Most appraisers and ARB members are much more inclined to make adjustments if third-party cost estimates are provided. In addition, the appraisers and many ARB members are inclined to only deduct a portion of the total cost using the argument, "we've been giving a replacement reserve allowance for this item for the past years and it'd be double-dipping to deduct the whole value off it in the current year." While this is an incorrect appraisal argument, it does tend to be the practice at many appraisal districts. The reality is, the cost of curing deferred maintenance is deducted from the offer by a prospective buyer.
Examples of functional obsolescence would be a three-bedroom apartment unit that only has one bathroom, or a two-bedroom apartment that does not have washer/dryer connections in an area where those connections are common. Another example would be an apartment that has a window air conditioner in an area where central HVAC is typical and expected.
Unequal appraisal analysis
The Texas Property Tax Code, section 41.43(b)(3), provides for appraising or appealing on unequal appraisal including ratio studies and "a reasonable number of comparable properties appropriately adjusted." Virtually all unequal appraisal appeals involve a reasonable number of comparables that are appropriately adjusted. Comparables are similar properties.
This is primarily because of the difficulty and cost of performing a ratio study. Historically, the position of many appraisal districts was that the property owner needed to get a fee appraisal for each comparable property and compare the market value estimated by the appraiser to the assessed value. The cost of getting multiple appraisals made this process financially impractical. Compiling a reasonable number of comparables appropriately adjusted is simple and straightforward. The first step is to choose a reasonable number of comparables. Usually four to five comparables is the typical number used at a property tax hearing, but in some cases, property owners choose ten to thirty. In some cases, there may only be one to four comparable properties that merit consideration. Most unequal appraisal presentations include three to ten comparables. The number of reasonable comparables depends on the location, type, size and age of the property. For example, there would be fewer five-year-old bowling alleys in the northern part of Harris County compared to recently built apartment complexes.
After choosing a reasonable number of comparables, array them in a table format, including fields of data such as account number, net rentable area, year built, street address, assessed value and assessed value per square foot.
You should also review the information in the appraisal district's House Bill 201 packet on an unequal appraisal. In many cases, the appraisal districts unequal appraisal analysis will document a reduction in your assessed value! If the appraisal districts unequal appraisal analysis documents a reduction, either the informal appraiser or the ARB should make the adjustment in assessed value for you. Having the opportunity to get an assessed value reduced automatically based on the appraisal districts unequal appraisal analysis is one of the reasons to appeal every property every year.
Completing Hearing Preparation
After reviewing the appraisal district's information on your property, the House Bill 201 package, and your market value and unequal appraisal analyses, determine the strengths and weaknesses of each approach and decide which basis of appeal provides the best opportunity for a meaningful reduction. Although appeals on unequal appraisal have clearly been the law of the land since 2003, some appraisal districts and review boards have chosen to disregard the option for unequal appraisal put forth by the Texas Legislature. Although there is litigation underway which should resolve this issue within the next year, it would be prudent to visit someone who is knowledgeable in local property tax appeals to determine whether the county appraisal district and ARB in your area are considering appeals on unequal appraisal.
Set Negotiating Perimeters
After reviewing the information, it is important to set the highest level of assessed value you will accept at the informal hearing because after you accept an assessed value, the appeal process will be complete for the year and you will not be able to appeal further.
Administrative Hearing Process
The two steps to the administrative hearing process are the informal hearing and the appraisal review board hearing.
The Informal Hearing
The following procedure and rules are typical at the informal hearing:
ท Meet with an appraiser representing the appraisal district. You should be polite and prepared at this meeting. While many property owners are frustrated and angry at the high level of real estate taxes, the appraisal district appraiser does not control the tax rate set by various entities nor the policy regarding property taxes in the area or the state. The appraisal district appraiser is trying to execute his job in a professional manner and appreciates it when property owners work with him on that basis.
ท Provide the appraiser information on your property and he will review that information and information he has available.
ท The appraiser will likely make an offer to settle the assessed value of your property fairly quickly. You can either accept the value or negotiate further. Either way, you should know within ten to twenty minutes whether the appraiser will offer an acceptable value. If the value is acceptable, conclude the negotiation by agreeing to the value for the current year. If the value offered is not acceptable, ask to go forward with an ARB hearing.
Appraisal Review Board Hearing (ARB)
The ARB hearing panel consists of three impartial citizens selected and paid by the appraisal district. The age of most ARB members ranges from fifty to eighty. There is an unfortunate bias in the system since the ARB members are selected and paid by the appraisal district, but most ARB members are reasonable people who want to make appropriate decisions.
Like the appraisal district appraiser, the ARB does not set tax rates or tax policy. The members are also not responsible for the effectiveness of local government. It is unlikely to help your case if you complain to the ARB members about either the high level of property taxes or the poor quality of some aspect of local government.
The ARB will expect you to make your presentation in about three to ten minutes. They will typically wait patiently while you make your presentation and may have questions after you conclude. An appraiser from the appraisal district, who may or may not be the same person who attended the informal hearing, will represent the appraisal district at the ARB hearing. The appraiser will comment on the evidence you presented and will often present other information the appraisal district has available. If you requested a House Bill 201 package for your property, it substantially limits the evidence the appraisal district appraiser can offer at the hearing. The ARB members may have questions after the appraisers presentation. Then the property owner will be given a final opportunity to rebut evidence presented by the appraisal district appraiser and quickly summarize the evidence. The ARB members strongly prefer you not repeat your entire presentation at this point.
After hearing the evidence, the ARB members will confer and make a decision. This decision is not subject to negotiation and they will not revise the decision if further evidence is presented. When this decision is announced, the hearing is effectively over. The ARB will send a letter two to four weeks later summarizing their decision and notifying the owner of a 45 day limitation from the date receipt of the ARB decision to either request binding arbitration or file a judicial appeal.
Binding Arbitration or Judicial Appeal
Beginning September 2005, owners of properties with an assessed value of $1 million or less may file a request for binding arbitration. The owner must file with the appraisal district no more than 45 days after receipt of the notice of the ARB's decision. The binding arbitration option is interesting because it includes a loser pays provision. The appraisal district pays for the arbitrator's fee if the final value is closer to the owner's opinion of value, and the owner pays for the binding arbitration if the final decision is closer to the appraisal district's opinion of value. Binding arbitration was passed to provide an alternative to judicial appeals, which can be expensive to prosecute.
Many owners pursue judicial appeals to further reduce property taxes. In 2005, O'Connor & Associates filed over 1,200 judicial appeals on behalf of property owners in the state of Texas. The judicial appeals can be expensive if the property owner and attorney don't understand the process and have a plan in place to minimize the cost of legal and expert witness fees. Judicial appeals are typically successful. However, success requires cooperation from the property owner, such as providing responses to questions, documents and a deposition if requested. The judicial appeal is meaningful as an option to minimize property taxes since it reduces the base value. This is important because the appraisal district and ARB consider the base value in the subsequent year when setting the administrative hearing value.
Conclusion
Property owners can generate substantial reductions in property taxes by appealing annually. Consider appeals on both market value and unequal appraisal and obtain the House Bill 201 information when preparing for the appeal hearing. Property owners should consider all three levels of appeal: informal hearing, ARB hearing and judicial appeal/binding arbitration. While the ARB hearing and judicial appeal/binding arbitration can be an intimidating process, each is straightforward once you understand the mechanics.
A Realtor’s Guide To Personal Safety
A major concern for realtors is personal safety. Many times the realtor is working alone in showing a property, having an open house, or manning the model house in a new subdivision. Some personal safety issues should include:
On the first meeting of a client, have them meet you at the office. Get as much personal information as possible. A copy of the driver’s license is a good start not only for safety, but also for the client database.
If you have a strange feeling about the client, don’t show property by yourself. Ask a co-worker to go with you; at worst you might have to split the commission. If you are manning an open house and you feel that you might be in danger, leave the property and call for help.
Always drive your own car to the property as this might be the only means of escape. On the way make notes on the type of car, color, and license plate number and call the office with this information. Once at the property make sure your car is not blocked and you have an easy escape (no backing-up).
As you are showing the property, always have the client lead you; this allows the property to present itself and keeps the client where you can see them. Make sure they sign-in on the registry and if the office does not have the information on the client, get the information to them. Your office will know you are with a client at this time.
Keep your keys and cell phone close and easy to access. If need be, keys can be effective weapon of surprise. If you have a handbag, keep it with you at all times or locked in the trunk of your car. Know the property, not only do you look more professional, but safer; your client does not know all of the exits as well as you should.
Take a few self defense classes, as a few minutes head start out of the property means the difference in a safe escape and being trapped. Take the first chance for escape and don’t try to talk your way out; keep your advantage. The more time you spend in a dangerous situation means a diminished chance of a safe exit.
Let the client see that you have contacted your office and the office knows who you are with. It is also a good idea to have a secret code for trouble such as “Pick up dog food” when you don’t have a dog. It is also a good idea to set your phone to vibrate as your client will not know if you are calling or if you are receiving a phone call.
If there is an emergency your office can play a vital role. Make sure they have the make of your car, its color, and license plate. If you are using a different car that day, make sure they have its description as well.
Make sure your office has your schedule for the day and that you check in on each appointment. If you are hosting an open house, make sure you have a registry book for clients to sign in. See if you can also include the client’s car description. Tell the client it is just in case they get a parking ticket and you want to document the reason for parking there or some other reason.
Many of these points may already in practice for the profession. Look to these procedures as also a safety concern. These safety tips should become second nature with little thought to be truly effective. Being an agent means sometimes you will work alone. With today’s cell phones and e-mail capabilities and some careful thought, you will be safer and will be in contact with help quicker.
On the first meeting of a client, have them meet you at the office. Get as much personal information as possible. A copy of the driver’s license is a good start not only for safety, but also for the client database.
If you have a strange feeling about the client, don’t show property by yourself. Ask a co-worker to go with you; at worst you might have to split the commission. If you are manning an open house and you feel that you might be in danger, leave the property and call for help.
Always drive your own car to the property as this might be the only means of escape. On the way make notes on the type of car, color, and license plate number and call the office with this information. Once at the property make sure your car is not blocked and you have an easy escape (no backing-up).
As you are showing the property, always have the client lead you; this allows the property to present itself and keeps the client where you can see them. Make sure they sign-in on the registry and if the office does not have the information on the client, get the information to them. Your office will know you are with a client at this time.
Keep your keys and cell phone close and easy to access. If need be, keys can be effective weapon of surprise. If you have a handbag, keep it with you at all times or locked in the trunk of your car. Know the property, not only do you look more professional, but safer; your client does not know all of the exits as well as you should.
Take a few self defense classes, as a few minutes head start out of the property means the difference in a safe escape and being trapped. Take the first chance for escape and don’t try to talk your way out; keep your advantage. The more time you spend in a dangerous situation means a diminished chance of a safe exit.
Let the client see that you have contacted your office and the office knows who you are with. It is also a good idea to have a secret code for trouble such as “Pick up dog food” when you don’t have a dog. It is also a good idea to set your phone to vibrate as your client will not know if you are calling or if you are receiving a phone call.
If there is an emergency your office can play a vital role. Make sure they have the make of your car, its color, and license plate. If you are using a different car that day, make sure they have its description as well.
Make sure your office has your schedule for the day and that you check in on each appointment. If you are hosting an open house, make sure you have a registry book for clients to sign in. See if you can also include the client’s car description. Tell the client it is just in case they get a parking ticket and you want to document the reason for parking there or some other reason.
Many of these points may already in practice for the profession. Look to these procedures as also a safety concern. These safety tips should become second nature with little thought to be truly effective. Being an agent means sometimes you will work alone. With today’s cell phones and e-mail capabilities and some careful thought, you will be safer and will be in contact with help quicker.
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