17/03/2021

Tax Geek Tuesday(?): The IRS Finally Figures Out The Real Estate Professional Rules

When you earn your living dealing with something as expansive and complicated as the Internal Revenue Code, it’s pretty damn easy to feel inadequate. To fear that you haven’t seen enough of the tax law. Or that the parts you have seen, you don’t fully understand. To worry that everyone on the other side of a meeting table or conference call knows far more than you do. But work and worry long enough, and one day you’ll wake up and realize that nobody knows this stuff. I say this not to disparage, but to encourage. Because the sooner you learn that the smartest people in the tax world--from Big 4 partners to IRS attorneys to Tax Court judges—can and do misinterpret the law with alarming regularity, you’ll stop beating yourself up when you struggle to figure out when to deduct your client’s accrued pension expense. Case in point: the law surrounding “real estate professionals”. As we’ll discuss more fully below, qualifying as a real estate professional has long been a boon to taxpayers who would otherwise be limited in the losses they could deduct from rental activities. More recently, meeting the standards of a real estate professional became important even when a taxpayer generates net rental income, because only real estate professionals can exclude rental income from the new 3.8% tax on net investment income, as this prior column discusses in excruciating detail. Despite encompassing only a few short paragraphs in Section 469, the real estate professional rules have been heavily litigated, and for some reason that defies explanation, I’ve read pretty much every case decided on the issue. On more than a few occasions, I’ve read the published opinions of Tax Court judges on Section 469 and questioned, “that’s not really what the law says, is it?” Now typically, when I feel this way while analyzing a decision, my skepticism can be attributed to the pedestrian reading comprehension skills that rendered me unsuitable for all but the shadiest law schools. But with regards to the real estate professional rules, I really believed that I was on to something. And it turned out I was right. So what’s the issue? Section 469 is a tangle of rules. While no one rule, standing on its own, is particularly troublesome, it always appeared to me that the IRS and the courts misunderstood how to fit them all together. Under the general rule of Section 469, all rental activities are treated as passive, regardless of the individual owner’s extent of participation. As a result, rental losses can only be used to offset other sources of passive income. If the owner doesn’t have any passive income—or enough to fully offset the losses--the excess losses cannot be used currently, and instead are carried forward to future years. An exception is carved out, however, for so-called “real estate professionals,” the idea being that someone who truly earns their living in real estate trades or businesses should be free to use rental losses without limitation. Quantitative Tests To ensure that the benefit of the exception is preserved for those who truly deserve it, Section 469(c)(7) requires that two quantitative tests be satisfied in order for a taxpayer to qualify as a real estate professional. Here are the tests, with my plain English definition in the parenthetical: 1. More than one-half of the personal services you perform in all trades or businesses for the tax year must be performed in real property trades or businesses in which you materially participate (you must spend more hours on real estate activities than non-real estate activities, to prove that you earn your living in the real estate world), and 2. You must perform more than 750 hours of services during the tax year in real property trades or businesses in which you materially participate. (This minimum-hour requirement prevents a retiree who spends 400 hours a year managing a rental property from qualifying). Real Property Trades or Businesses Very important to this discussion is the fact that the term “real property trades or businesses” encompasses far more than simply the rental of property; in fact, the statute lists nearly a dozen activities that constitute a real property trade or business, including development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage. Thus, you do not have to be a landlord to be a real estate professional, a fact that plays a huge role in the ongoing struggle many experts have in deconstructing Section 469, and one I will address again shortly when we tie this all together. Material Participation You may have noticed that both quantitative tests hinge on your “material participation” in the real property trade or business. For this standard, we turn our attention to Reg. Section 1.469-5T, which provides seven ways in which you can establish that you materially participate in a trade or business: 1. You participate in the activity for more than 500 hours during the year, 2. Your participation in the activity constitutes substantially all of the participation by all individuals (including non-owners) in the activity for the year, 3. Your participation is more than 100 hours during the year, and no other individual (including non-owners) participates more hours than the taxpayer, 4. The activity is a significant participation activity in which you participate for more than 100 hours during the year and your annual participation in all significant participation activities is more than 500 hours. [A significant participation activity is generally a trade or business activity (other than a rental activity) that you participate in for more than 100 hours during the year but do not materially participate in (under any of the material participation tests other than this test),] 5. You materially participated in the activity for any five tax years (whether or not consecutive) during the 10 immediately preceding tax years, 6. For a personal service activity, you materially participated for any three tax years (whether or not consecutive) preceding the current tax year, or 7. A generic facts and circumstances test. Let’s put together what we have so far. In order to qualify as a real estate professional, you must: 1. Participate in a real property trade or business as defined by the statute. 2. Materially participate in that real property trade or business under one of the seven tests of Reg. Section 1.469-5T. 3. The time spent participating in real property trades or businesses—but only those real property trades or businesses in which the you materially participate—must exceed the time you spend in non-real property trades or businesses; i.e., your day job. 4. The time spent participating in real property trades or businesses—but only those real property trades or business in which you materially participate—must exceed 750 hours. Knock those four tests out, and you’re a real estate professional. By way of example: A owns one large commercial building. He rents the building to 40 different tenants. A spends 2,000 hours managing and maintaining the building for the year, and it is A’s only job. The building kicks off a $400,000 rental loss. Is A a real estate professional permitted to use the loss in full without limitation? Here, the determination is fairly painless. We simply run through our four tests: 1. Does A participate in a real property trade or business as defined by the statute? Sure does…rental and leasing are listed as real property trades or businesses. 2. Does A materially participate in that real property trade or business under one of the seven tests of Reg. Section 1.469-5T. Yes. A spends 2,000 hours in the activity, which is more than the 500 hours necessary to satisfy test #1. 3. Does the time spent participating in real property trades or businesses—but only those real property trades or businesses in which the A materially participates—exceed the time you spend in non-real property trades or businesses; i.e., your day job? Yes. A spends 2,000 hours on real property trades businesses in which he materially participates, and none on non-real property trades or businesses. 4. Does the time spent participating in real property trades or businesses—but only those real property trades or business in which A materially participate—exceed 750 hours? Yes. He spends 2,000 hours participating in a real property trade or business in which he materially participates, and the last time I checked, 2,000 is more than 750. So our guy A can deduct his rental loss in full, right? Not so fast. What many people don’t realize—though this is not the part the courts have consistently gotten wrong—is that satisfying the two quantitative tests and qualifying as a real estate professional does not guarantee that your rental activities are nonpassive. It simply means that your rental activity is not passive regardless of your level of participation. Stated in another manner, qualifying as a real estate professional is simply the first step in the process; it merely buys you the opportunity to prove that you materially participate in your rental activities, and can thus treat them as nonpassive. Let’s go back to our example. A clearly qualifies as a real estate professional. But that is merely the first step. Next, A has to establish that he materially participates in his rental activity. For A, this easy; he spent 2,000 hour on his one rental activity, so he materially participates by any measure of the -5T regulations. But what if we switch the facts a bit? Assume A spent 2,000 hours in the real estate trade or business of construction, and owned one rental property on which he spent only 50 hours collecting rent checks throughout the year, and he paid a full-time property manager to do the rest. Assume further that the rental produces a $100,000 loss. How does that change the analysis? In this case, A would still qualify as a real estate professional, by virtue of his 2,000 hours spent materially participating in his construction business. Simply qualifying as a real estate professional is not enough to convert A’s rental loss to nonpassive, however. In order for that to be accomplished, A must now establish that he materially participates in the rental activity, which he will fail to do by virtue of the fact that he spent only 50 hours on the activity, and other people spent more time than him on the activity. As a result, even though A is a real estate professional, his rental loss remains passive. As you can see, these rules are (fairly) straightforward when you have only one rental property. Where the IRS and courts have gone wrong, however, is in measuring whether a taxpayer with multiple rental activities qualifies as a real estate professional. Two Grouping Elections When a you have one activity under the meaning of Section 469—whether it be a rental property or a partnership or S corporation interest-- materially participating in the activity requires 500 hours of your time (assuming you don’t want to have to consider the hours of any other person participating in the activity), an achievable standard by even the laziest among us. But what if you have ten partnership interests? Or seven rental properties? Are you reasonably expected to spend 500 hours in each activity? The answer is no, and the regulations under Section 469 offer two alternatives for determining material participation when you have multiple activities. Under Reg. Section 1.469-4, you can elect to group activities together for purposes of measuring material participation; make the election, and you are permitted to aggregate the hours spent in the grouped activities. The regulations allow you to group activities however you see fit, provided that 1) the grouped activities represent an “appropriate economic unit,” and 2) you generally cannot group rental activities with nonrental activities. As a result, the -4 regulations are often referred to as the “slice and dice” elections, because you can carve up your activities into multiple groupings for purposes of measuring material participation. Of course, grouping together rental activities under the -4 regulations is largely a meaningless gesture, because unless you qualify as a real estate professional, it doesn’t matter whether you materially participate, because all rental activities are treated as passive under Section 469. To assist a real estate professional with multiple activities to overcome the treatment of rental activities as passive, the regulations offer another elective regime. Remember, qualifying as a real estate professional does not make your rental properties nonpassive; rather, it gives you the opportunity to establish that you materially participate in your rental activities, in which case they will become nonpassive. Reg. Section 1.469-9(g) provides that for purposes of establishing this material participation, a real estate professional may elect to treat all interests in rental activities as one activity. In contrast to the -4 election, the -9 election is an “all or nothing” election; you either group all of the rental activities, or you group none of them. If you make the election, you measure your material participation in your rental activities by summing the hours of time spent on all rental activities. Fail to make the election, and you must establish that you materially participate in each separate activity. So, if we layer the -9 regulations on top of the steps we established earlier for determining if you qualify as a real estate professional and can use rental losses without limitation, it would look like this. You must: 1. Participate in a real property trade or business as defined by the statute. 2. Materially participate in that real property trade or business under one of the seven tests of Reg. Section 1.469-5T. 3. The time spent participating in real property trades or businesses—but only those real property trades or businesses in which the you materially participate—must exceed the time you spend in non-real property trades or businesses; i.e., your day job. 4. The time spent participating in real property trades or businesses—but only those real property trades or business in which you materially participate—must exceed 750 hours. 5. You must materially participate in either the grouped rental activities—if an election was made under -9—or in each separate rental activity if no such election was made. Tax Court Misinterpretation The IRS and courts have frequently made a mess of the steps described above. The problem has been the undue amount of importance placed on the “all or nothing” election of -9 to aggregate all rental activities of the taxpayer for purposes of measuring material participation. In several decisions, the -9 election has been elevated above its proper place in the real estate professional determination; the IRS has used the -9 election to determine if a taxpayer qualifies as a real estate professional, despite the fact that, as indicated above and quite plainly in the regulations, the -9 election applies only to a taxpayer who has already qualified as a real estate professional for the sole purpose of determining whether the taxpayer materially participates in his rental activities. In Jahina v. Commissioner, T.C. Summary Opinion 2002-150, a taxpayer was denied real estate professional status because she failed to make the election under -9 to aggregate all of her rental activities. As a result, the court concluded: As a consequence of the failure to elect, Mrs. Jahina must qualify as a real estate professional with respect to each property separately in order to avoid a determination that the rental activities were per se passive under Section 469. Thus, to hold in petitioners’ favor, the Court must find 1) That more than one-half of Mrs. Jahina’s personal services during the tax year were performed in each rental property activity and 2) that Mrs. Jahina performed more than 750 hours of services during the tax year on each of the claimed properties (emphasis added). The Tax Court employed a similar incorrect approach in Jafapour v. Commissioner, T.C. Memo 2012-165 and Hassanipour v. Commissioner, T.C. Memo 2013-88. If you’ve been following along, the problem with the Tax Court’s interpretation of the interplay between the two quantitative tests of Section 469(c)(7) and the “all or nothing” grouping election of Reg. Section 1.469-9 should quickly become evident. The Tax Court is using the -9 election to determine if a taxpayer qualifies as a real estate professional, despite the fact that the regulations make clear that the -9 election becomes relevant only after a taxpayer has satisfied those two tests, for the sole purpose of determining if the taxpayer materially participates in his rental activities. Therefore, the court is asking the taxpayer who fails to file a grouping election to satisfy two statistical impossibilities: 1) to spend more than half his time working on each rental activity, and 2) spend more than 750 hours on each rental activity (while technically not an impossibility, it becomes a realistic improbability as the number of rental activities increase.) This is not what the Code and regulations require, and placing this burden on a taxpayer can result in incorrect conclusions. To illustrate: A owns five commercial rental properties. He spends 600 hours on property A, 300 on property B, 300 on property C, 250 on property D, and 300 on property E. A performs no other services throughout the year. Assume that under Reg. Section 1.469-5T, A materially participates in each property, even though he does not spend 500 hours in properties B, C, D, or E (i.e., he satisfied one of the other six tests for those four properties). Because he materially participates in each separate activity, A did not elect to group the activities together under Reg. Section 1.469-9. Assume each property produces a loss for the year. Using the Tax Court’s approach, because A failed to make the election to group the activities under -9, A must measure his qualification as a real estate professional on a property by property basis. Thus, because A did not spend more than 750 hours in any one property, he will fail to qualify as a real estate professional, and all of his losses will be treated as passive. Under the proper approach, however, we get a very different result. Let’s go back to our steps; A must: 1. Participate in a real property trade or business as defined by the statute. As a lessor of property, A meets this standard. 2. Materially participate in that real property trade or business under one of the seven tests of Reg. Section 1.469-5T. A materially participates in each of his rental activities; 3. The time spent participating in real property trades or businesses—but only those real property trades or businesses in which the you materially participate—must exceed the time you spend in non-real property trades or businesses; i.e., your day job. Because A materially participates in each separate rental activity, we can count the hours spent in each activity towards the total. He spent 1,750 hours on his real property trade or business (rental activities) and none on non-real property trades or businesses. As a result, this test is satisfied. 4. The time spent participating in real property trades or businesses—but only those real property trades or business in which you materially participate—must exceed 750 hours. Once again, because A materially participated in each rental activity, we can use all 1,750 hours for the purposes of this test. Thus, A has spent more than the requisite 750 hours. Because he has passed both tests, A qualifies as a real estate professional. Notice, we have not yet addressed the implications of making the “all or nothing” grouping election of -9. 5. You must materially participate in either the grouped rental activities—if an election was made under -9—or in each separate rental activity if no such election was made. Now that A has established himself as a real estate professional—and only now—we look to whether an election to group his rental activities was made under -9. This is because the election is only relevant when a taxpayer who has qualified as a real estate professional under the two quantitative tests of Section 469(c)(7), as A has, must take the next step of establishing that he materially participates in his rental activities. Despite the fact that A has not made the election, because he materially participates in each separate activity, each activity is treated as nonpassive. By limiting the application of the -9 grouping election to after the real estate professional tests are satisfied, we get the correct result that A’s rental losses are nonpassive. The results would be equally as glaring if A were a real estate professional by virtue of a non-lessor activity. A work in construction for 2,000 hours per year. He also owns three rental properties. He spends 200 hours on property A, 200 on property B, and 200 hours on property C. Assume that under Reg. Section 1.469-5T, A materially participates in each property, even though he does not spend 500 hours in any one activity (i.e., he satisfied one of the other six tests for those four properties). Because he materially participates in each separate activity, A did not elect to group the activities together under Reg. Section 1.469-9. Assume each property produces a loss for the year. Under the court’s approach, because A did not make the grouping election under -9, A would have to satisfy the “more than half” and “750 hour” test for each property, which he clearly cannot do. Thus, he would fail to qualify as a real estate professional. Under the correct approach, however, A must: 1. Participate in a real property trade or business as defined by the statute. As a builder of real estate, A meets this standard. 2. Materially participate in that real property trade or business under one of the seven tests of Reg. Section 1.469-5T. A spends 2,000 hours in his construction business, and thus materially participates. 3. The time spent participating in real property trades or businesses—but only those real property trades or businesses in which the you materially participate—must exceed the time you spend in non-real property trades or businesses; i.e., your day job. Because A materially participates in his construction business and each of his three rental properties, we can count the hours spent in each activity towards the total. He spent 2,600 hours on his real property trade or business (construction and rental activities) and none on non-real property trades or businesses. As a result, this test is satisfied. 4. The time spent participating in real estate trades or businesses—but only those real estate trades or business in which you materially participate—must exceed 750 hours. Once again, because A materially participated in his construction activity and each rental activity, we can use all 2,600 hours for the purposes of this test. Thus, A has spent more than the requisite 750 hours. Because he has passed both tests, A qualifies as a real estate professional. Notice, we have not yet addressed the implications of making the “all or nothing” grouping election of -9. 5. You must materially participate in either the grouped rental activities—if an election was made under -9—or in each separate rental activity if no such election was made. Despite the fact that A has not made the election to group his rental activities, because he materially participates in each separate activity, each activity is treated as nonpassive. The IRS Comes Around It appears that our long national nightmare of smart people misinterpreting the real estate professional rules has mercifully come to an end. In CCA 201427016, the IRS acknowledged the shortcomings of previous court decisions, and clarified that the “all or nothing” grouping election of Reg. Section 1.469-9 applies only after a taxpayer qualifies as a real estate professional. In the ruling, the facts were nearly identical to the example we just addressed. The taxpayer owned two rental properties and a development business. The taxpayer spent more than 750 hours—in total—on the three activities, and did not elect to group the two rental activities together. The ruling then succinctly addressed the issue that has been the subject of 4,000 words in this column: If a taxpayer fails to elect to group all rental activities together under Reg. Section 1.469-9, do the two quantitative tests of Section 469(c)(7) apply separately to each rental activity? The IRS concluded that they do not, once and for all clarifying that the determination of whether a taxpayer satisfies the real estate professional rules is unaffected by the -9 grouping election; rather, the grouping election is relevant only after the taxpayer qualifies as a real estate professional to determine if the taxpayer materially participates in his rental activities. Applying this rationale to the facts in in the ruling, the IRS concluded that: 1. The taxpayer was involved in a real property trade or business comprised of a development business and two rental activities; 2. The taxpayer materially participated in the real property trade or business by virtue of having spent more than 500 hours in the activity; 3. The taxpayer satisfied the “more than half” test; 4. The taxpayer satisfied the “more than 750 hours” test and thus qualified as a real estate professional. 5. At this point, the only thing standing between the taxpayer and nonpassive rental losses was the determination of whether he materially participates in the activities. Because no grouping election was made under -9, material participation had to be measured on a property by property basis. One property satisfied the material participation test; one did not. Summary If you’ve read this far, you've lost thirty minutes of your life that you’ll never get back, so hopefully you’ve learned something. Hopefully, you’ve learned that the “all or nothing” grouping election of Reg. Section 1.469-9 applies only after you determine if you are a real estate professional. So you’ve got that going for you. Which is nice. But more importantly, hopefully you’ve learned that tax law is hard. Partners get it wrong. The IRS gets it wrong. Tax Court judges get it wrong. So don’t beat yourself up. Keep reading, keep learning, and you’ll find yourself as well positioned as anyone to figure this stuff out. At least until it gets changed again.

LEER
17/03/2021

10 Essentials To Know About the American Rescue Plan Act. #americanrescueplanact

#1 Tax-free Unemployment Benefits The ARPA extends $300 weekly supplemental unemployment benefits through September 6. The more pressing issue from a tax perspective, however, is that in one of only two tax changes made by the bill that is retroactive to 2020 (the other is in #10), the first $10,200 of unemployment income received during 2020 is now excluded from income. The limitation is $10,200 per spouse; so if both spouses received unemployment in 2020, a maximum of $20,400 may be excluded. The exclusion only applies if 2020 adjusted gross income (AGI) is less than $150,000. This limitation applies regardless of filing status, and it is a cliff—if AGI is $149,999, the taxpayer will get the full $10,200 exclusion; if AGI is $1 higher, however, the entire exclusion disappears. If a taxpayer had already filed a 2020 return prior to the new legislation, temptation exists to file a Form 1040-X as quickly as possible, a process the IRS has finally made easier by permitting the amended return to be e-filed. Note, however, that late last week, the IRS fired off an email encouraging taxpayers to pump the brakes, stating, “The IRS strongly urges taxpayers to not file amended returns related to the new legislative provisions or take other unnecessary steps at this time.” If you read this the way I do, it looks like some type of streamlined relief may be forthcoming. #2 Additional Stimulus Payments We’ve got a third round of stimulus payments on the way, this time in the amount of $1,400 per eligible recipient. Unlike previous rounds, taxpayers will also receive payments for all dependents, not just those who are under the age of 17 at year end. If you’re looking for a refresher on who qualifies as a dependent, this is as good a place to start as any. Payments will be phased out over extremely narrow ranges of AGI: from $75,000 to $80,000 for single taxpayers ($150,000 to $160,000 for MFJ). Head over to the section titled Stimulus Payments: To Rush or Hold Back 2020 Filings? for a few things to consider in maximizing the stimulus payments. And if you’re really looking for a detailed Q&A on the latest round of payments, give this a read. #3 Expanded Child Tax Credit For 2021 only, the bill expands the amount, eligibility, and refundability of the child tax credit (CTC). The credit increases from $2,000 to $3,000 ($3,600 for a child under 6), the age limit increases from 16 to 17, and the full amount of the credit is refundable (compared to $1,400 under current law.) Based on my rudimentary understanding of the mechanics of human procreation, there’s still time to make yourself another $3,600 credit by year-end; but you’d better get cracking. Example. H&W have AGI of less than $150,000 and two children, ages 2 and 4. In 2020, H&W were entitled to a $4,000 credit, of which only $2,800 was refundable. For 2021 only, the credit rises to $7,200, and the entire amount is refundable. The 2021 CTC phases out in two tranches: The excess credit (amount over the “normal” 2020 credit) begins to phase out at $75,000 of AGI for a single taxpayer ($112,500 for HOH; $150,000 for MFJ), while the standard credit continues to phase out at AGI limits of $200,000 ($400,000 for MFJ). A portion of the 2021 child tax credit may also be paid in advance, and will be reconciled against the actual credit claimed on the 2021 tax return. Unlike receipt of the stimulus payments, however, any excess payment received would need to be paid back as additional tax on the 2021 return, similar to the premium tax credit.Or at least, how the premium tax credit worked for all years before 2020, as item #10 below will explain. #4: Expanded Child and Dependent Care Credit The child and dependent care tax credit also gets a one year boost: the maximum amount of qualifying expenses taken into account for a family with one qualifying child increases from $3,000 to $8,000 ($6,000 to $16,000 for two qualifying children), and the top credit percentage rises from 35% to 50%. As a result, a family with two children in care could see the credit jump from a high of $2,100 in 2020 to as much as $8,000 in 2021. The credit will also be fully refundable, but will phase out in a couple of steps: Once AGI exceeds $125,000 (regardless of filing status), the 50% credit rate will reduce by 1% for every $2,000 AGI exceeds $125,000, but not below 20%. If you followed that (you did not), by the time AGI hits $185,000, the credit percentage will be reduced to 20%. From AGI of $185,000 to $400,000 the credit percentage will remain 20%, and then Once AGI exceeds $400,000, the credit percentage will again reduce by 1% for every $2,000 of AGI in excess of $400,000. If you followed along this time, the credit percentage will be reduced to zero once AGI exceeds $440,000. Put it all together, and a family with AGI of $200,000 who pays $16,000 for the care of two qualifying children is entitled to a refundable credit of $3,200 ($16,000 * 20%). If AGI were $100,000, the same family would earn the full credit of $8,000 ($16,2000 * 50%). #5: Restaurant Recovery Plan A new $25 billion grant program was created to assist bars and restaurants during 2021. Take a look at the section below titled Help is on the way for Bars, Restaurants for a Q&A on the program. #6: Extension of the Employee Retention Credit The bill extends the extremely generous employee retention credit (ERC) from June 30th, 2021 through the end of the year. While still a refundable payroll credit, the ERC will now offset the employer’s share of the Medicare tax rather than the Social Security tax. The credit will be computed for the second half of 2021 in the same manner as the first: a 70% credit rate and maximum wages of $10,000 per employee/per quarter. And of course, the taxpayer (or, as we’ll see, most taxpayers) will need to establish that at least one of the final two quarters of 2021 is an “eligible quarter” in which either: 1) business was either fully or partially suspended by government order; or 2) receipts for the quarter dropped by more than 20% when compared to the same quarter in 2019. An election is available to determine the gross receipts drop on the immediately preceding quarter. Certain “recovery startup businesses” can now claim the credit during the second half of 2021 even if they don’t otherwise have an eligible quarter. The credit, however, will be limited to $50,000 per quarter. A recovery startup business is a business that began after February 15, 2020, and that has average 3-year taxable income of less than $1M. I’m still trying to make sense of how a business that started in 2020 can have average 3-year receipts of any amount, much less $1 million, but hey, this isn’t the first time hastily written statutory text has left me confused. In general, businesses with more than 500 full-time employees in 2019 may only claim the 2021 credit on wages paid to employees NOT to work. New in the APRA, however, “severely financially distressed employers” who have experienced a greater than 90% drop in gross receipts in one of the final two quarters of 2021 when compared to the same quarter in 2019 will be able to ignore that limitation, and take the credit on all wages paid. Lastly, the ARPA extended the statute of limitations on IRS assessment for the ERC from the traditional three years to five. #7: Paid Sick and Family Leave Credits The credits for paid sick and family leave first made available by the Families First Coronavirus Response Act are extended through September 30, 2021. The ARPA did not extend the requirement for employers to actually pay family and sick leave, but if an eligible employer chooses to do so, several favorable changes are made for credits claimed after March 31, 2021. The bill increases the amount of the family leave credit from $10,000 to $12,000 per employee and expands upon the eligible reasons for which paid leave applies, such as for receiving a COVID-19 vaccination or recovering from a COVID-19 caused condition or disability. In addition, the paid sick leave 10-day limitation resets on March 31, 2021, allowing a new ten days of qualified sick pay and a corresponding credit to the employer. Self-employed individuals may continue to claim the paid sick and family leave credits. The bill would increase the number of days to be included as qualified family leave equivalent amounts from 50 to 60 for periods between April 1, 2021 and September 30, 2021. Paid sick leave equivalent days are also reset for self-employed individuals retroactive to January 1, 2021. #8: Shuttered Venue Operators Grant Previously, taxpayers were barred from applying for a Shuttered Venue Operators (SVO) grant if they received either a first or second-round PPP loan after December 27, 2020. The ARPA removes that prohibition, providing instead that the grant will be reduced by any PPP proceeds received by the taxpayer after that date. For a general understanding of the SVO, you can read my article here, or if you don’t trust me, you can get info straight from the SBA in these FAQs. You’ll note, however, that while the statute doesn’t say this, those FAQs provide that any taxpayer who receives an SVO grant may not subsequently apply for a PPP loan. #9 Expanded Earned Income Credit The ARPA expands the earned income tax credit (EITC) for certain low-income childless workers, nearly tripling the credit amount. The bill also allows childless workers who are ages 19 to 24, and those who are over age 64, to claim the EITC. In determining the EIC for 2021, taxpayers may elect to substitute their earned income for 2019 if that 2019 amount is greater than the taxpayer's earned income for 2021. In full transparency, that’s the most I’ve ever written about the EIC at any one time, so if I got anything wrong, cut me some slack. #10 Dependent Care Assistance Programs/Premium Tax Credit Changes While these two provisions have nothing in common, I’m combining them because every good list stops at ten. Going to eleven is an invitation to anarchy. Section 129 generally allows an employee to exclude from income up to $5,000 of “dependent care assistance” paid by an employer. The ARPA increases the benefits—for 2021 only—to $10,500, or from $2,500 to $5,250 for those taxpayers married filing separately. As for the premium tax credit, for the first time, taxpayers with household income in excess of the federal poverty line will be eligible for the credit in 2021. But even better, on 2020 tax returns, taxpayers will not have to repay any excess advanced credit received.

LEER
feria inmobiliaria
11/11/2020

Feria inmobiliaria.

Para que las familias #dominicanas mejoren su calidad de vida con la adquisición de una casa propia, hoy inicia #ExpoHogarBR2020 con tasas fijas desde 7%, y un plazo máximo de hasta 20 años para pagar.

LEER
documentos a solicitar al momento de comprar una propiedad inmobiliaria en republica dominicana
11/10/2020

Documentos a solicitar al momento de comprar una propiedad inmobiliaria en República Dominicana

1- Título de Propiedad Servirá para comprobar que el que está vendiendo es realmente el propietario de ese inmueble 2- Acto de Venta Notarizado Es vital para poder verificar lo estipulado en el mismo y validar las firmas con la cédulas 3- Certificación de Estado Jurídico de Inmueble: Dicho documento será necesario para saber que en este inmueble no existe ningún tipo de gravamen u oposición para la venta, además de verificar que sobre o detrás de este inmueble no existe ningún inconveniente. 4- Certificación del Impuesto a la Propiedad Inmobiliaria IPI Con este se verifica si la propiedad no tiene impuesto a pagar, es decir que se encuentra al día con dicho impuesto o exento del mismo 5- Copia de la Cédula o Identificación del Vendedor: Este documento servirá para verificar a dicho vendedor, además de que será requerido en todos los procesos a realizar ante los órganos correspondientes. 6- En caso de que el vendedor sea una empresa y/o compañía debe entregarle: a) Documentos constitutivo de la Cía, así como, el acta de asamblea donde los socios accionistas autoricen al firmante a venderle a usted el inmueble. b) Copia de la cédula del representante de la compañía. 7) En caso de que la propiedad este Financiada en un banco, debe solicitar al vendedor: a) Certificación de Deuda del Banco donde tiene el financiamiento b) Radicacion de saldo de deuda en el banco dirijido a la Juridiccion Inmobiliaria 8) Copia de Cédula del comprador 9- Copia del Plano Catastral (en caso de ser un solar o una casa) El mismo deberá de estar aprobado por la dirección de mensuras catastrales correspondiente. 10) En caso de que el vendedor o comprador este fuera del país, sera necesario, si el caso lo amerita: Poder Consular, Nominas, Social Security, Pasaporte, etc. 11) Si el Vendedor o Comprador son casado se necesitara la Identificación de Ambos

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el asesor inmobiliario
16/05/2020

El asesor inmobiliario

¿Es importante contar con un asesor inmobiliario para comprar una propiedad en Miami?, ¿Por qué confiarle mi inversión a un tercero si pudiera hacerlo yo mismo?, ¿Qué diferencia hay entre contratar a un asesor inmobiliario o un vendedor de inmuebles?…

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vivienda bajo costo en la republica dominicana
12/05/2020

Vivienda bajo costo en la República Dominicana

Vivienda bajo costo en la República Dominicana ¿Qué son Viviendas de Bajo Costo? Son las viviendas calificadas como de bajo costo por el Instituto Nacional de la Vivienda (INVI) cuyo precio de venta es igual o inferior a los dos millones quinientos setenta y tres mil setecientos con cuarenta y ocho. (RD$2,573,700.48), para los contratos firmados a partir del primero de enero del año 2018. El valor exento del impuesto a la transferencia para las viviendas del Proyecto Ciudad Juan Bosch, adquiridas con préstamos hipotecarios, de acuerdo con la Cláusula 24.1.2 del Contrato de Fideicomiso para la Construcción de Viviendas de Bajo Costo República Dominicana VBC-RD, aprobado mediante Resolución 332-15, promulgada en fecha 11 de diciembre del año 2015, para el año 2018 será de: 2,119,330.80. ​​ ¿Qué es el Bono de Vivienda de Bajo Costo? Es una compensación o bono del Impuesto sobre Transferencias de Bienes Industrializados y Servicios (ITBIS) pagado en el proceso de construcción de los proyectos de viviendas de bajo costo desarrollados bajo la figura del fideicomiso. Esta compensación servirá como parte del inicial en la compra de la vivienda o para el capital del préstamo hipotecario en caso de haber completado dicho inicial. Nota: El precio de las viviendas de bajo costo está establecido en el artículo 129 de la Ley 189-11, ajustado anualmente por inflación, en base al Índice de Precios al Consumidor, calculado por el Banco Central, por Grupos de Bienes y Servicios en el renglón vivienda, conforme al artículo 327 del Código Tributario de la República Dominicana. ¿Cuáles condiciones debe cumplir para beneficiarse del Bono de Vivienda de Bajo Costo? Para beneficiarse del bono por la adquisición de viviendas de bajo costo debe cumplir con las siguientes condiciones: El proyecto residencial donde está adquiriendo la vivienda debe estar calificado por el Instituto Nacional de la Vivienda en la categoría “Vivienda de bajo costo” y estar inscrito en la Dirección General de Impuestos Internos. Ser adquiriente de una primera y única vivienda. En el caso de adquirientes casados bajo el régimen de comunidad de bienes, ambos cónyuges deberán cumplir con este requisito. Identificar el número de unidad y el proyecto habitacional. La vivienda deberá ser utilizada o habitada por el o los adquirientes, ascendientes, descendientes y/o colaterales, todos hasta un primer grado. Queda prohibido el alquiler o transferencia, durante un periodo mínimo de 5 años. En caso de incumplimiento, el adquiriente está obligado a la devolución del monto del bono otorgado. ¿Quién debe solicitar el Bono de Vivienda de Bajo Costo ante la DGII? Esta solicitud debe ser realizada por las fiduciarias en nombre de los adquirientes finales de las unidades habitacionales de cada proyecto. ¿Cuáles documentos deben ser depositados en la DGII por las fiduciarias para solicitar el Bono de Vivienda de Bajo Costo del adquiriente? De acuerdo a lo establecido en la Norma General 01-2015, modificada por la Norma General 02-2016, para solicitar el bono o compensación del ITBIS por la adquisición de viviendas de bajo costo, las fiduciarias deben depositar en la DGII, en su Centro de Asistencia al Contribuyente de la Sede Central de la DGII o en el Área de Información de la administración local más cercana los siguientes documentos: Formulario Solicitud de Certificación de Calificación o Bono de Vivienda de Bajo Costo (FI-GERE-001) llenado, firmado y sellado por la fiduciaria. Certificación a nombre del adquiriente y de su cónyuge de no registro de bienes inmuebles emitida por la Dirección General de Catastro Nacional (DGCN). Copia del contrato tripartito de compra-venta entre la entidad de crédito, el fideicomiso y el o los adquiriente(s) o copia del contrato definitivo de compra venta entre el fideicomiso y el o los adquirientes(s). Para ambos casos se debe constar el precio de venta de la vivienda y la descripción de la unidad habitacional indicando su tipo, según la certificación​ del INVI. Cuando los documentos depositados estén firmados por apoderados, deberán incluir copia del poder que otorga poder de representación y de la cédula del representante.​​ Copia de la Cédula de Identidad del o de los adquiriente(s) y su (s) cónyuge(s) o copia de los pasaportes si se trata de dominicanos residentes en el exterior. Carta del o de los adquirientes autorizando a la DGII a transferir a favor del fideicomiso el monto de la compensación del bono. En caso de dominicanos residentes en el exterior, Declaración Jurada de Residencia del adquiriente, apostillada o notariada por el Consulado Dominicano en la que conste el país donde reside, su domicilio permanente que indique que no percibe ingresos en la República Dominicana y los datos generales del pariente que estaría habitando en la vivienda. Cuando el adquiriente desee que el bono de vivienda de bajo costo sea aplicado al inicial de la vivienda, la fiduciaria debe solicitar la certificación de calificación del adquiriente. Una vez expedida, la fiduciaria deberá realizar el descuento del valor del bono del inicial y cuando la vivienda esté construida en un 80% deberá remitir una certificación a la DGII para que proceda con el desembolso del mismo al Fideicomiso, dicha solicitud deberá estar acompañada de los documentos que sustenten el descuento del valor del bono del inicial.​ Nota: Los requisitos para solicitar la certificación son los mismos que se requieren para aplicar al bono de vivienda de bajo costo, exceptuando que en lugar del contrato definitivo o de financiamiento, se requiere el contrato de promesa de compra. Adicionalmente, deberán depositar los documentos que sustenten la proporción pagada del inicial de la vivienda. ¿Cómo saber si un proyecto habitacional está clasificado como Vivienda de Bajo Costo y si el mismo se encuentra registrado en la DGII? Para conocer si un proyecto habitacional se encuentra clasificado como Vivienda de Bajo Costo, puede ingresar a nuestro portal web, en la sección “Consultas” seleccionando “RNC”. Para confirmar si un proyecto está registrado en la DGII, debe comunicarse con el Departamento de Fideicomisos o la Sección de Registro de Proyectos Inmobiliarios y proporcionar los datos del proyecto que desea consultar. ​ Nota: Los requisitos para solicitar la certificación son los mismos que se requieren para aplicar al bono de vivienda de bajo costo, exceptuando que en lugar del contrato definitivo o de financiamiento, se requiere el contrato de promesa de compra. Adicionalmente, deberán depositar los documentos que sustenten la proporción pagada del inicial de la vivienda.

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lo que debes saber sobre estafas inmobiliarias
12/05/2020

LO QUE DEBES SABER SOBRE ESTAFAS INMOBILIARIAS

Una de las estafas inmobiliarias más habituales, consiste en pedir la entrega de un anticipo de dinero con la promesa de acceder en el futuro a una propiedad en condiciones ventajosas. Sin embargo, la persona que entrega el dinero, finalmente nunca recibe el bien en cuestión. Gran parte de las estafas inmobiliarias, se produce al comprar sobre planos y entregar cantidades a cuenta, que pueden no ser recuperadas si la promoción no sale adelante. Por ello, es necesario asegurarse que todos los papeles estén en regla y que los datos coincidan. En el caso de las viviendas de segunda mano, el consumidor debe tomar precauciones en la fase pre-notarial, la negociación y el acuerdo de voluntades. Sobre todo, debe evitar entregar cantidades a cuenta si tiene dudas sobre la titularidad de la vivienda.

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lo que debes saber sobre vender una vivienda
12/05/2020

LO QUE DEBES SABER SOBRE VENDER UNA VIVIENDA

Para asegurar el pago del crédito, el valor de la nueva compra-venta, debe ser superior al monto de la deuda financiera. Y en caso de que la plusvalía del sector haya aumentado, se podrá ofertar a un valor considerablemente más alto que el total del préstamo. Usualmente, si el valor de la vivienda es mayor a la deuda que se tiene, se recomienda que el comprador entregue la diferencia al vendedor después de inscribir el inmueble a su nombre y se acredite que se encuentra libre de hipotecas, gravámenes y prohibiciones legales. Antes de hacer cualquier transacción, para evitar cualquier inconveniente, es importante que las partes involucradas en el proceso de vender una vivienda, se asesoren con expertos del mercado inmobiliario, tales como corredores de bienes raíces o profesionales del ámbito legal y financiero.

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ventas en linea
11/05/2020

VENTAS EN LÍNEA

La situación de pandemia global, la cuarentena y el aislamiento físico, nos ha forzado a acelerar el tiempo y traer el futuro al día de hoy. Un proceso que veíamos distante, algunos a 5 otros a 10 años, pero que todos veíamos venir: La venta 100% digital. Las crisis adelantan los tiempos, y en este caso, para los involucrados en el medio inmobiliario,

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