Senate Backs 1099 Repeal

Reforming the Reform: Senate Backs 1099 Repeal

The Senate today didn’t repeal health care reform, but it did get rid of a provision that would impose a major paperwork burden on small businesses next year.

All 47 Republicans voted for an amendment to repeal the health care reform law enacted last year, but all 51 Democrats present voted against it. The amendment, which would have been added to legislation reauthorizing the Federal Aviation Administration, needed 60 votes in order to be approved.

But by an 81-17 vote, the Senate did pass an amendment that would repeal a health care reform provision that requires businesses to file 1099 forms with the Internal Revenue Service any time they spend more than $600 a year with any other business. That requirement, which is scheduled to go into effect in 2012, is a significant expansion of the current 1099 reporting requirement, which applies only to payments to unincorporated service providers.

Senators agreed with small businesses that complying with this requirement would be a nightmare. The only question was to how make up for the revenue that the provision was designed to generate. In theory, third-party reporting of payments to businesses makes them less likely to hide income from the IRS.

The amendment that passed directs the Office of Management and Budget to tap up to $44 billion in unspent funds appropriated for other purposes to cover the revenue that would be lost by repealing the 1099 requirement.

That’s the approach Republicans prefer, but many Democrats wanted to raise taxes on oil companies and multinational corporations instead. They contend Congress shouldn’t hand over spending decisions to the executive branch.

The amendment sets “a terribly dangerous precedent,” said Senator Daniel Inouye, a Hawaii Democrat, who chairs the Senate Appropriations Committee.

Difficult decisions on how to reduce spending lie ahead, he said, and its Congress’ responsibility to determine where these cuts will be made. Delegating these decisions to the executive branch “may be politically expedient,” Inouye said, but it also is “thoughtless and rash.”

Nevertheless, the Senate’s decision to tap unspent money to pay for the cost of 1099 repeal makes it much more likely to be agreed to by the House, which already passed total repeal of health care reform. Business groups hope 1099 repeal is enacted quickly because businesses would need time to change their accounting systems if the requirement does go into effect next year.

Business groups opposed the tax increases in the Democratic amendment, contending raising taxes on oil companies would increase energy costs.

“This amendment will cost good-paying manufacturing jobs,” said Aric Newhouse, senior vice president at the National Association of Manufacturers. “Discriminatory tax policies that pick ‘winners’ and ‘losers’ and pit industry sectors against each other undermine U.S. competitiveness, innovation and job growth.”



Read more: http://www.portfolio.com/views/blogs/capital/2011/02/02/senate-votes-to-repeal-1099-health-care-requirement#ixzz1D018wRw6

Is becoming a Landlord for you

Tempted to buy a rental property as an investment? Make sure you have the characteristics to handle becoming a landlord!
One of the most common ways to invest in real estate is to buy a house or small apartment building and rent it out. According to the latest American Housing Survey, there are more than 33 million rental housing units in the U.S., about 60 percent of which are owned by individuals.
Acquiring a rental property sounds like easy money-you'll acquire equity in the property while someone else pays the mortgage. But dealing with maintenance and business issues-not to mention the occasional ornery tenant-isn't a job for everyone. Before you hang out a vacancy sign, ask yourself if you have the skills to handle the job of landlord:

Commitment
Being a landlord is a hands-on job, and you don't get to set your own hours. If a tenant calls in the middle of the night to report a burst pipe, you must deal with the problem. That's why experienced landlords suggest living no more than 45 minutes from your rental property.

Patience
Landlords who try to fill vacancies as quickly as possible may wind up with less-than-ideal tenants. No property owner wants to leave a rental unit empty for long. But taking time to screen applicants is always worth it. You should do a credit check, ask for and follow up on personal and business references and call the applicant's previous landlord.

Fairness
Screening your applicants doesn't mean you can reject them for reasons such as age or race. If you do, you can be sued for discrimination.

Savvy
You don't need to be a lawyer or accountant to be a successful landlord, but a little knowledge of the law and accounting principles helps. You need to be familiar with the laws governing landlord and tenant relationships in your community, and understand the tenant's rights as well as yours as a landlord. Bookkeeping skills and knowledge of relevant tax rules will help you keep tabs on the profitability of your investment.

Detachment
Many good landlords are friendly and approachable. But beware of becoming too chummy with your tenants-you may need to be firm if someone falls behind on rent. If you're a doormat, some tenants will treat you like one.
Do-it-yourself skills
If you can wield a hammer, wrench and trowel, you can save money and make sure repairs are handled promptly. If your handyman skills are limited to mowing the lawn, you'll need to hire skilled workers, and the expense will cut into your return on investment.

Tolerance
Being a landlord can be like having a roommate. You'll have to put up with habits that may not jibe with yours, as well as the occasional damage to your property-particularly if you're renting out a furnished unit. Make sure you can deal with this.
Few people possess all these qualities, but four or five are essential to making it as a landlord. If you're not landlord material but still want to invest in rental property, consider hiring a property management company to look after repairs, rentals and so forth. This could cost 10 to 15 percent of the total rental income from your property, so make sure your investment will still pay off.

Rental Agreements: Clauses to consider

Important Clauses To Add To Your Lease Agreement
by Wayne Gathright

While the basic lease provisions are important, most of the time, a basic lease agreement is not enough.
In addition to incentive clauses, there are many other important clauses that landlords often tend to neglect, yet these can be invaluable if there is ever a dispute. Here are some examples of clauses that can be added to your lease agreement:

Parking. Spell out how many vehicles (cars, boats, motorcycles, etc.) you will allow to be parked at the residence? Where?

Residential Use. Can the tenants run a business? What kind?

Garage Sales/Auctions. Will you permit these? How often?

Notification of Change of Status. Require that the tenant update you on changes, for instance, employment.

Subletting. Is it allowed? How many new residents? Notification

Co-signers. Should you add another responsible party as a guarantor?

Partial Payment of Rent. What will happen if you receive only part payment?

Returned Check Fee. How are you going to handle returned checks?

Bankruptcy. What if your tenant files for bankruptcy?

Lease Violations. What are your rights? What are the tenant’s rights?

Tenant’s Absence. What if the tenant disappears? Can you get into the rental?

Furniture Lien. Can the tenant’s possessions be takes?

Increase in late fees. Can you charge additional late fees if the tenant is often late?

Judgment collection. Who pays?

Utility bills. What if the tenant defaults?

Emergency repairs. What if you have to cut off the water for repairs?

Problem neighbors. How do you handle complaints?

Disasters. What if you can’t fulfill your landlord obligations because of a disaster?

Illegal activity. Make sure you can take action against drug use, explosives, firearms, etc.

Quiet Enjoyment. You should insure that the tenant cannot intrude on other people’s rights.

Smoking. Make sure your rules are clear.

Pets. How many pets? What additional deposit? What about additional cleaning costs?

Yard Upkeep. Make sure your property looks neat and is safe.

Health and Safety Codes. Be sure your tenant doesn’t violate these.

I hope these ideas make you think about how important your tenant lease can be. With the right rental agreement design, you can create a lease that will protect your property, promote timely rent receipt, motivate your tenants, and protect your legal rights as a landlords.

Wayne Gathright is president of WG Software, Inc., developers of the Tenant File Property Management Software. He has over 30 years experience in consulting and software development for real estate. Mr. Gathright also markets a product for easy creation of leases called The Lease Designer, that allows the user to select from several prewritten leases, choose from over 200 prewritten rental clauses, and add house rules templates to the lease. A user can write their own leases and clauses, modify the existing templates, or import leases from other programs.

Guest Post: What is a Reverse Mortgage?

By Steve Stenganelli
Reverse Mortgage Basics

A reverse mortgage is a type of loan that certain eligible homeowners can get to tap into the equity in their home. Unlike traditional loans, they do not require the same sort of underwriting so no income, asset or credit checks are needed. And unlike a traditional loan, there is no monthly repayment for any amounts borrowed. Repayment of the loan’s principal and interest starts only after the homeowner dies or the home is sold.

To be eligible for such a loan, all owners on the property title need to be at least age 62.

For the most part, reverse mortgages, also referred to as RMs, are backed by the federal government through the FHA (Federal Housing Administration) that administers the program.

Myth: The Bank Keeps the House

These types of mortgages have been around for many years (since the late 1970s) and have gone through many changes.

One misconception about these types of loans is that a homeowner loses the house to the bank because of certain terms of such loans when they first came out. In the way way past, banks would take the title to the home. But that is far from the reality for these types of loans now. The property title remains with the homeowner.

How A Reverse Mortgage Limit Is Set

The amount of money that a homeowner gets is based on current age, life expectancy, and appraised value. With this information, the bank will determine the credit line or limit that the homeowner can tap. The lender will apply an interest rate to the amounts outstanding and add it to the balance owed (and subtract the interest accrued from the amount of credit line that is available). Eventually, when the homeowner dies or moves out of the home then the lender will require repayment.

The total amount that is owed is capped as a percentage of the property value which is assumed to appreciate at a certain rate during the owner’s life expectancy.

A homeowner can move out and sell the property and keep the proceeds above whatever the payoff amount is. If the homeowner dies and the property passes to his estate, his heirs can sell the property or refinance it and keep it.

The cost for such a loan can be pricey. Even with recent administrative changes reducing origination fees from the standard 2% of the loan amount, these loans can cost upwards of $12,000 for a $250,000 or $300,000 credit line amount. Although traditional credit and income underwriting are not required, all the other costs associated with a closing like title work, title insurance, recording fees, mortgage insurance and underwriting are still needed.

Why Would A Homeowner Consider A Reverse Mortgage? Comparing Some Options

Why would a homeowner opt for this? Let’s face it. Most folks would prefer not to move into an assisted living facility or a nursing home if they can avoid it. So a reverse mortgage is a good option for those who want to age in place in their home.

It provides a cash flow to help support the costs of running the house. And it taps the equity that a homeowner has built up over time that can be used to pay for essentials like medicine or home renovations to make the home safe and useful for an aging homeowner.

Yes, home equity lines or loans are also an option. They can be even cheaper certainly on the origination side since so many banks offer them with no closing costs. But the homeowner must make a payment each month even if it is just the interest only that is typically required for the first five or 10 years of the line. And if the owner doesn’t have the cash to make that payment, then there is the risk of a foreclosure.

As a former mortgage banker, I would see situations where an elder couple would call me after having refinanced the loan several times. Each time they had to incur closing costs and because their income or credit may have slipped they would only qualify for more costly loan terms that could put them at greater risk of losing the house down the road.

Downsides for A Reverse Mortgage

Setting up a reverse mortgage as a line of credit will not jeopardize Social Security benefits and is not counted as an income source for tax purposes. On the other hand, if the homeowner is receiving Medicaid, then it could be counted as an assessable asset that may limit qualification for such benefits.

Some folks who are facing bankruptcy have opted to go the reverse mortgage route. Jesse Redlener and David Burbridge, attorneys who specialize in these matters, told me of the case where a couple transferred the title from joint ownership (husband and wife) to just the wife. Then they completed the reverse mortgage process. And the husband who now owned no other property filed for bankruptcy. The courts considered this a fraudulent transfer of the property and the assets available for the credit line now became eligible to pay off the husband’s other creditors.

Get More Information From Your Planning Team

The bottom line here is that before making a serious money move you really need to bring in the professionals to help navigate through the minefield. Actions have consequences and this is an area where a good team of advisers (banker, financial planner, attorney) can help.

For more information on reverse mortgages, you may want to call Bob Irving of First Integrity Mortgage, LLC, a licensed reverse mortgage originator.

Rental Application References

Asking for references on a tenant application is important for a variety of reasons. However, collecting references is a worthless exercise unless you check the applicant out. At the very least contact the current and previous landlords. The most important reference to verify is actually the previous landlord and not the current. Sometimes the current landlord will gloss over the facts in order for the tenant to move out quickly whereby the previous landlord can be completely candid since that tenant no longer resides in an apartment they own. Ask about:

The tenant’s payment habits
Whether they follow rules
Do they respect the property
Living habits and guest that visit
Would they rent to this tenant again?

You will be surprised what you can learn in just one phone call.

Other references include friends and relatives. These references are critical to you so that you know who you can rely on in the event of an emergency or to locate the tenant once they’ve moved out. Be sure to cross check the phone numbers of references to be sure that they are from the same geographic area that the prospective tenant claims to be from.

To obtain a FREE RENTAL APPLICATION email the salem landlord

10 OUTSTANDING Reasons to be a MEMBER of...

THE GREATER SALEM LANDLORD ASSOCIATION

1. Understand the rules of housing court to be an effective plaintiff.
2. Stay current with developments in the industry through our monthlymeetings, website and blog
3. Learn about pending laws and regulations that impact landlords and influence legislators with your opinions.
4. Have access to Massachusetts specific materials, including landlord manuals, forms and sample leases
5. Find ways to lower your expenses and run your business more effectively.
6. Learn ways to limit liability from tenants, guests and workers.
7. Learn how to avoid fines for discrimination and code enforcement.
8. Prevent lead paint poisoning by learning the laws and their impact on your business.
9. Meet and learn from other members who are eager share solutions to common landlord problems.
10. Become part of the strong voice of property owners group North of Boston

*Bonus* Members have access to the member only section of the website

What Massachusetts Property Owners Need to Know About Snow Removal

In light of the yesterday's " 2011 Blizzard" massive snow accumulation thought it important to clarify a property owners responsibility for snow removal. A new law took effect in July 2010, when the Supreme Judicial Court ruled in the case of Papadopoulos v. Target Corporation.

The ruling means property owners now must take reasonable care to remove all snow accumulation from their property and keep accessible areas safe to travel. Previously, Massachusetts property owners enjoyed a special exemption from liability for "natural accumulations" of snow and ice. An injured person had to demonstrate the accumulation was "unnatural," such as a snow pile created by a plow.

The ruling means snow removal is now a requirement. If a property owner fails to use reasonable care in clearing snow and ice from their property and someone is injured as a result, the property owner can be held liable. Subsequently, shovel early and often.” Additionally some cities and towns have adopted their own policies in regards to snow removal. Such as in the city of Boston , snow removal is required for the full width of the sidewalk or a minimum width of 42 inches. Throwing snow in Boston city streets is strictly prohibited. Boston residents have 6 hours after snowfall to remove snow & ice. Business owners have 3 hours to remove snow & ice, regardless if the snow and ice are caused by nature or from a city plow.

Check with your city or town to see what the “snow rule” is there.