Lieb School featured in Dan's Papers for Storm Front CE Class

Have you read Dan's Papers Today? Read about our Storm Front class in Southampton On Tuesday night. http://danspapers.com/2013/06/douglas-elliman-offers-free-real-estate-classes/

How does the Supreme Court's DOMA decision affect the real estate industry?

As you've surely heard, today, the U.S. Supreme Court declared critical portions of the Defense of Marriage Act (DOMA) unconstitutional.  For those who don't know, although some states (including New York) have recognized same-sex marriage as legal, DOMA defines marriage to exist only between a man and a woman - denying same-sex couples a multitude of federal benefits and rights which heterosexual couples regularly enjoy.

In United States v. Windsor, Edith Windsor was legally married in New York to Thea Spyer but was slapped with $363,000 federal estate tax bill because she was denied use of the spousal exemption to the federal estate tax.  Today, the Supreme Court ruled that DOMA's definition of "spouse" and "marriage" as exclusively heterosexual is in violation of the U.S. Constitution's Fifth Amendment right to equal protection.  You can read the decision here.

But why should you, purely from the point of view of a professional in the real estate industry, care about this decision?  Taxes, taxes, and more taxes.  Real estate holdings are often a couples' most valuable assets.  Left unattended, these assets can create some tax headaches down the road when it comes time to transfer title.


Estate Tax and Gift Tax Spousal Exemption

The Internal Revenue Code ("IRC") has an exemption which allows a spouse to leave their entire estate, regardless of value, to their surviving spouse - tax free.  This exemption was the genesis of Edith Windsor's lawsuit.  She was taxed on the inherited estate of her spouse because DOMA barred her from using the unlimited spousal exemption.  If you prefer to transfer your assets while alive, the IRC also provides for a gift tax exemption.  Normally, each person may only "gift" a certain amount of assets each year, and/or over the course of their lifetime.  However, if you make that gift to your spouse, there are no limits to the amount you transfer.  Now, with the Supreme Court's DOMA decision, same-sex spouses can use the same spousal exemptions that heterosexual couples have been using.


Internal Revenue Code Section 121- Primary Residence Capital Gains Exemption

IRC Section 121 expands the maximum capital gains tax exemption for the sale of a primary residence from $250,000 to $500,000 in the case of married couples filing a joint return.  Even further, this section permits the surviving spouse to claim a $500,000 exemption if the sale is made within two years of the death of their spouse.  Now, same-sex couples have access to the larger capital gains tax exemption for married couples.


Doubling and Splitting of Tax Exemptions

There are a few cases where the IRC permits married couples to double or split exemptions.  For instance, compared to a single individual, a married couple may double the amount gifted each year without reporting the gift to the IRS.  As another example, in 2013, each estate has a blanket $5.25 million exemption from taxes.  However, a surviving spouse may be able to utilize unused portions of their deceased partner's estate tax exemption to expand their own exemption to over $10 million.  With the Supreme Court's DOMA decision, same-sex couples now have more options to play with when planning their estate.


Federal Income Tax

For all the good news the DOMA decision brings, it might not be all sunshine and roses for same-sex couples in terms of tax benefits.  Filing jointly does not necessarily mean lower income tax liability, and in fact, can often lead to greater tax liability.  Every individual case is different and each couple should fully explore what effects a joint filing will have on their tax liability.


GO SEE A TAX PROFESSIONAL!

Every individual is strongly encouraged to seek the advice of a tax and/or estate planning professional if they have any questions regarding the application of these tax benefits.  Whether you are a same-sex couple eager to explore the new options available to you, or a heterosexual couple just now delving into some estate planning for your future, estate planning is an important and extremely nuanced aspect of asset management best left to professionals.  Also, if you have wrongfully been charged a tax like Edith Windsor, see your attorney asap to get a refund!!!

Storm Front CE and IDAs Post-Sandy

At last evening's continuing education course, Storm Front, I discussed Bill Number S5776-2013, which relates to permitted use of funds of an industrial development agency.

This bill, if enacted, would amend the law "to allow for the approval of Industrial Development Agency projects for property specifically used in making retail sales in areas directly impacted negatively by a natural disaster".

So, I highly suggest that local real estate agents support this Bill as it will benefit your community. At the least, take a read and understand what an IDA is and how it is applicable to your profession.

Also, at the course, I promised to provide a link to the Building Science & Rebuilding branch of FEMA's Building Code Resource, which can be located here. This is a valuable resource when rebuilding in the wake of a storm to enable a more resilient structure for the next one - as I said, we do live on an Island.

Brokerage: End of corporate titles ushers in professionalism. Check out the NYREJ for featured article...

Check out Page 12 of The New York Real Estate Journal. Latest Article published by Andrew Lieb, "Brokerage: End of corporate titles ushers in professionalism". In this article, Andrew discusses the latest update in advertising regulations and the practice of Real Estate Professionals in NY.

Lieb at Law is hiring! Position available for a 2013 College Graduate

Attention College Graduates! Take a Year Off Before Law School

Join a thriving law firm that leads our profession through advocacy and advice supported by cutting-edge technology and know-how.  This exciting opportunity is for a 2013 college graduate looking for valuable office and legal experience before heading to law school.  You will be exposed to real estate transactions and litigation, learn the court system and assist in cases from real estate brokerage and mortgage foreclosure litigation through matrimonial, collections and personal injury. The foundation and knowledge obtained in this position will not only get you ready for law school, but will give you an essential competitive edge before starting your legal career. 

Ideal qualities: Self-driven, organized, resourceful, assertive and dynamic. Must strive to be the best.

Prove yourself and several opportunities for advancement including law clerk positions throughout law school and beyond.  This position is full time and located in our Center Moriches office. 

To apply, email cover letter and resume to careers@liebatlaw.com. Writing sample is preferred. 

Making Home Affordable Program extended to 12/31/2015

Pursuant to Supplemental Directive 13-04 of this month, the Making Home Affordable Program, including HAFA (short sales) and HAMP (mortgage mods), is extended through the end of 2015.

Additionally, Supplemental Directive 13-04 simplifies the income documentation requirements under HAMP, by modifications to the rules concerning Form 4506-T; Benefit Income; Verification of Monthly Gross Expenses; Wage or Salary Income; Self Employment Income; Rental Income; and Alimony, Separation Maintenance and Child Support.

To illustrate, now the requirement that a servicer must verify monthly gross expenses is removed and a servicer may just rely on a borrowers stated expenses. With respect to the other categories, the Supplemental Directive enables the servicer to "verify such income in accordance with the [...] documentation the servicer relies on when modifying loans held in its own portfolio..."

The extension is certainly welcomed as the foreclosure crisis is far from over. Also, these new rules are smart as they simplify an unnecessarily complex process, which has resulted in both lenders and borrowers being frozen in time when seeking to follow the rules. Instead, its expected that more decisions will be made whether to modify a loan based upon these changes.

HUD 2012 Housing Discrimination Study: Housing Discrimination Against Racial and Ethnic Minorities

HUD just issued its study of incidence and forms of discrimination experienced by black, Hispanic, and Asian renters and homebuyers.

The study finds that "minority homeseekers are told about and shown fewer homes and apartments than whites", as a result of more than 8,000 tests conducted in 28 metropolitan areas.

Clearly discrimination still exists in housing. However, the study takes pains to explain that differing circumstances of classes of people in housing does not equal discrimination. Instead, the discrimination is only present when it causes the resulting disability in housing.

Real estate agents should read the Executive Summary, understand discrimination and be mindful to weed out such practices as we always strive to bring professionalism to our field.

Credit Score and Old Credit Cards

We are often questioned about our advice at our Mortgage Mania class that its okay to cancel old credit cards. People say - Lieb you are wrong.

Well here is a Business Insider article by John Ulzheimer of SmartCredit.com that seems to agree with us. Have a read and decide for yourselves.

Listen NYC Residents - Airbnb is Dangerous: Be warned

On November 8, 2012, we wrote a blog called Airbnb is Brilliant - NYC Housing. Therein, we said that "[a]   major barrier to their success are local laws that prohibit short term rentals in many municipalities across the Country". We also referenced NYC's rental law and said that maybe Airbnb's helping with housing in the wake of the hurricane would generate enough good will to overturn the City's minimum rental law.

It didn't.

On 5/9/13, a NYC resident was found liable for a $2,400 Civil Penalty for violating AC 28-118.3.2 as a result of renting his condominium unit (actually the rental at issue was offered by the tenant of the unit, but that is irrelevant for this discussion) to two Russian women from the 9th to the 14th of September in 2012.

NYC's minimum rental period law is designed to prevent transient guests, which is a topic that have discussed previously on quite a few occasions such as in February of 2010 and May of 2012. The thrust of the topic is that there are safety issues in permitting unregulated hotels to exist for consumers and that there are further issues for other unit owners in allowing unscreened strangers to have access in and out of their condominium and cooperative buildings. There are also many arguments that transient guests in neighborhoods greatly reduce property values.

Its important to note that the decision distinguished the violated act from simply having "house guests or lawful boarders, roomers or lodgers" who stay for less than 30 days. The decision sets forth that house guests cannot be strangers who pay for occupancy and with respect to the other terms it looks to the definition of a common household in the Code as "A common household is deemed to exist if every member of the family has access to all parts of the dwelling unit. Lack of access to all parts of the dwelling unit establishes a rebuttable presumption that no common household exists".

So, NYC residents stop using Airbnb, it advertises your illegal rentals and gives the government great evidence if they wish to prosecute. To read the decision for yourselves, click here.

Is Your Tattoo a License Law Violation?

In early May, a newspaper article was passed around our office which churned up more than a few laughs from the staff. New York City based Rapid Realty offers its Real Estate Agents a 15% raise in their commission split if they get a tattoo of the broker's logo. Check out the article here. Turns out, their decision to get a tattoo of Rapid Realty's logo could result in a potential License Law violation.

Lieb at Law and Lieb School have gotten their hands on the new Real Estate License Law Advertising Regulations which will take effect on January 2, 2014. Anyone with a tattoo of their broker's logo may want to pay particular attention to sections (a)(1) and (c)(1) of these new regulations.

Section (a)(1) defines an advertisement as "promotion and solicitation related to licensed real estate activity, including but not limited to, advertising via mail, telephone, website, e-mail, electronic bulletin boards, business cards, signs, billboards, and flyers."

Section (c)(1) states that any advertisement "shall indicate that the advertiser is a real estate broker or provide the name of the real estate broker or real estate brokerage and either: (i) the full address of the real estate broker or real estate brokerage or, (ii) the telephone number of the real estate broker or brokerage."

So, agents with a tattoo of your broker's logo - that tattoo just might make you a walking advertisement! Make sure your tattoo is in compliance with your license law. You have until January 2, 2014 to schedule another session at your local tattoo parlor to add your broker's name and address or telephone number to go alongside your broker's logo!

The sign off line of that May 2nd article could end up being more applicable than the author probably imagined.

"Perhaps getting permanently branded with a company logo gives a whole new meaning to the term 'walking billboard.'"