ALERT: Don't Let Congress Inaction on Flood Insurance Sink Your Clients

ACTION ALERT: Flood insurance rates are about to go up, unless Congress acts now! Don't allow increased insurance costs to price your qualified clients out of their new home.

Approximately 5.6 million property owners in over 20,000 communities across the country rely on the National Flood Insurance Program (NFIP) for flood insurance. Congress provided a 5-year reauthorization of the NFIP, but severe implementation problems threaten to undermine real estate transactions where flood insurance is required to obtain a mortgage.

TAKE ACTION HERE!

NAR is calling for support of the bipartisan "Homeowner Flood Insurance Affordability Act" which would delay insurance rate increases. A delay in newly-mandated NFIP rate increases will allow FEMA to determine more accurately how these rates will impact property owners as Congress planned, and give affected property owners more time to respond to higher rates.

If fewer homeowners can afford flood insurance, then in the event of future floods taxpayers will spend more on federal disaster relief to owners of uninsured properties. Meanwhile, without flood insurance, homeowners located in flood zones could default on their mortgages.

Click here to take action on flood insurance and protect your qualified homebuyers!

Relief for California Homeowners! Families who sold their home in a short sale get a special gift under their tree - relief from state income taxes

Homeowners in California who sold their home in a short sale will not be subject to state income taxes on the so-called "phantom income" resulting from debt forgiveness. This is an important benefit to families all over California and is as hard-fought victory for REALTORS®.

In a statement issued today, the California Association of REALTORS® said that the California Franchise Tax Board clarified the taxable status of short sales and matched the policy already issued by the Federal Internal Revenue Service last month. The good news just keeps coming, just in time for the holidays.

The C.A.R. statement goes into more detail on this important victory:

C.A.R. today received a letter from the California Franchise Tax Board (FTB), obtained by the State Board of Equalization, clarifying that California families who have lost their home in a short sale are not subject to state income tax liability on debt forgiveness “phantom income” they never received in a short sale.

Last month, in a letter to California Sen. Barbara Boxer, the Internal Revenue Service (IRS) recognized that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so-called “cancellation of debt” income to the underwater home seller for federal income tax purposes.  Following the IRS’s clarification, C.A.R. sought a similar ruling by the California FTB.  Now with the FTB’s clarification, underwater home sellers also are assured that they are not subject to state income tax liability, rescuing tens of thousands of distressed home sellers from California tax liability for debt written off by lenders in short sales.

We are pleased with the recent clarifications issued by the IRS and the California Franchise Tax Board, which protect distressed homeowners from debt relief income tax associated with a short sale in California.  We would like to thank Sen. Boxer and BOE member George Runner for their leadership in obtaining this guidance from the IRS and FTB.  Distressed California homeowners can now avoid foreclosure or bankruptcy and can opt for a short sale instead, without incurring federal and state tax liability, even after the Mortgage Forgiveness Debt Relief Act of 2007 expires at the end of this year.

REALTORS meet Carson Mayor Jim Dear to talk about economic growth, business taxes, and real estate

This morning approximately 70 REALTOR members of SBAOR met with the Mayor of Carson, Jim Dear, to talk about a wide range of topics including new developments in the city, business taxes, real estate signs, and what he sees for the future. The Mayor found an audience open to dialogue; in fact, this event was just one of several "Breakfast with the Mayor" programs that SBAOR hosts throughout the year in different South Bay cities.

 Mayor Dear began his remarks by talking about public safety. This is the fifth consecutive year that crime has dropped in Carson, a number in which he takes pride. In fact, in the nine years since he has been mayor, he said that the city has come a long way with many improvements and more to come.

Carson now offers more and better restaurants, local healthcare facilities and other community improvements. Coming soon, Carson will host the Porsche Driving Experience and a new shopping experience at the Boulevards at South Bay, which could come online in 2016.

What about my high business taxes?

Carson has some of the highest business license taxes for real estate licensees as compared to most cities in Los Angeles and Orange Counties, according to a study conducted in 2011 by Carson city staff. The Carson business tax consists of an amount charged to brokers and a much lesser amount charged to agents. The Mayor said that he would be open to reviewing that tax and asked REALTORS to weigh in on how best to proceed. Should the tax be reduced for brokers? agents? We are looking forward to continued conversations on this topic with the City of Carson in order to help create a healthy business environment in the community and preserve revenue for needed city services.

Finally, Mayor Dear also talked about real estate signs. As is the case in many South Bay cities, Carson's laws for real estate signs do not permit placement in public rights-of-way including medians, sidewalks and elsewhere. Is there a way to allow some signs to be placed in these areas during ope houses and preserve public safety? The Mayor talked about the need for home sales to occur and new families to come to the city.


SBAOR's Breakfast with the Mayor series is one of our most popular and well-attended events that we host in the South Bay. Stay tuned for more meetings with more mayors in 2014! Watch this space, check out SBAOR's Calendar of Events and be sure that you are receiving our daily emails! If you have any questions about your email or your membership, call the SBAOR Membership Department at (310)326-3010.