Wednesday, January 20, 2016

Foreign sellers? FIRPTA withholding increases to 15%

 Foreign sellers? FIRPTA withholding increases to 15%

 

WASHINGTON – Jan. 19, 2016 – Congress recently made changes to the U.S. Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). While two changes should benefit the real estate community, a third will impact foreign sellers of certain properties.

On the positive side, new FIRPTA rules will make U.S. commercial property more attractive to foreign investors, according to Ralph W. Holmen, associate general counsel for the National Association of Realtors® (NAR). The law doubles the maximum amount of stock ownership a foreign investor may have in a U.S. publicly-traded real estate investment trust (REIT), bumping it up from the current 5 percent to 10 percent. It also permits certain foreign pension funds to invest in real estate investment trusts (REITs) without having FIRPTA treatment apply.

On the other hand, the new FIRPTA rules increase the withholding tax paid by foreign sellers of certain properties effective Feb. 17, 2016.

"The recently enacted Protecting American Taxpayers from Tax Hikes (PATH) Act (H.R. 2029) includes two very positive FIRPTA provisions that are conservatively estimated to boost foreign investment in U.S. commercial real estate by $20-$30 billion per year," writes Holmen. "However, as part of a package of tax changes to 'pay for' the two provisions, Congress also included an increase in the FIRPTA withholding rate from 10 percent to 15 percent."

How new withholding works

The law considers three levels of property purchases: A personal residence of $300,000 or less; a personal residence worth more than $300,000 but less than $1 million; and properties valued at $1 million or more:

  • $300,000: Foreign sellers currently pay no FIRPTA tax, and this doesn't change under the new rule, providing the property will be used as a residence
  • $300,000-$1 million: The current 10 percent FIRPTA tax does not change under the new rule, providing the property will be used as a residence
  • $1 million-plus: The FIRPTA tax goes up from the current 10 percent to 15 percent after Feb. 16. In this $1 million-plus category, it doesn't matter whether the property will be used as a residence or not

What is FIRPTA?

Congress created FIRPTA based on reports that foreign investors were purchasing U.S. real estate and then selling it at a profit without paying any U.S. taxes. Consequently, FIRPTA created a requirement forcing buyers to withhold 10 percent of the purchase price and remit it to the Internal Revenue Service at the time of closing, subject to a few exceptions.

"Usually, the settlement agent is the party that withholds and remits the funds to the IRS, but the buyer is legally responsible," writes Holmen. "In certain circumstances, the buyer's agent can also be held liable."

Florida Realtors contracts

The current version of Florida Realtors/Florida Bar forms and the CRSP-14a FIRPTA addendum contain language that refers to a 10 percent withholding. Since that 10 percent requirement changes for some transactions after Feb. 16, 2016, the association is currently working on changes that reflect the higher 15 percent for $1 million-plus property purchases.

Once forms have been updated, a notice will run in Florida Realtors News announcing the changes.

© 2016 Florida Realtors®  

 

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Wednesday, December 23, 2015

Economic Development News Cape Coral

 

Economic Development News

 

 

Message From Your EDO Manager

It's All in the Numbers

 

http://files.ctctcdn.com/a7165bdd001/1cd39762-132f-4965-a1ea-8bb7c365f7bc.jpgWhat's going on in the Cape? Seems like you can't turn a corner around here without seeing new construction. New housing and commercial development is on the rise.

 

Commercial Building Permits in 2015 were up 13 percent over last year and 183 percent over 2013. New housing starts have increased by over 58 percent since last year and are up 108 percent over 2013.

 

The U.S. Census Population estimates that Cape Coral's population is more than 169,854, which is 10 percent higher than our 2010 population of 154,301 (U.S. Census, December 2015). As we all know, during the winter season, it is estimated that our population climbs even higher.

 

With the population growing, Cape Coral as a market becomes a more desirable location for new commercial development, just as the current numbers bear out. Additionally, Cape Coral is working to create new large-scale development opportunities with Bimini Basin, Seven Islands and Academic Village. These projects have the potential to add substantially to our commercial tax base and create thousands of new jobs.

 

Additionally, there are two new apartment developments coming: 312 units on Pine Island Road and another 90 units on Veterans Parkway. This type of workforce housing is desperately needed in the Cape as we grow our commercial base.

 

Manpower has ranked the Cape Coral-Fort Myers MSA as the No. 1 location in the U.S. for job growth in the first quarter of 2016. A net amount of 37 percent of businesses surveyed said they will be adding jobs, as opposed to only 18 percent projecting job expansion a year ago.

 

We will continue to work with existing businesses and recruit new businesses to the Cape to ensure that the numbers keep adding up. Looking forward to an even more productive 2016. Have a wonderful holiday season!

 

Sincerely,

 

Dana Brunett

 

City of Cape Coral

Economic Development Manager

 

 

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Saturday, December 19, 2015

Economic Development News Cape Coral

 

Economic Development News

 

 

Message From Your EDO Manager

It's All in the Numbers

 

http://files.ctctcdn.com/a7165bdd001/1cd39762-132f-4965-a1ea-8bb7c365f7bc.jpgWhat's going on in the Cape? Seems like you can't turn a corner around here without seeing new construction. New housing and commercial development is on the rise.

 

Commercial Building Permits in 2015 were up 13 percent over last year and 183 percent over 2013. New housing starts have increased by over 58 percent since last year and are up 108 percent over 2013.

 

The U.S. Census Population estimates that Cape Coral's population is more than 169,854, which is 10 percent higher than our 2010 population of 154,301 (U.S. Census, December 2015). As we all know, during the winter season, it is estimated that our population climbs even higher.

 

With the population growing, Cape Coral as a market becomes a more desirable location for new commercial development, just as the current numbers bear out. Additionally, Cape Coral is working to create new large-scale development opportunities with Bimini Basin, Seven Islands and Academic Village. These projects have the potential to add substantially to our commercial tax base and create thousands of new jobs.

 

Additionally, there are two new apartment developments coming: 312 units on Pine Island Road and another 90 units on Veterans Parkway. This type of workforce housing is desperately needed in the Cape as we grow our commercial base.

 

Manpower has ranked the Cape Coral-Fort Myers MSA as the No. 1 location in the U.S. for job growth in the first quarter of 2016. A net amount of 37 percent of businesses surveyed said they will be adding jobs, as opposed to only 18 percent projecting job expansion a year ago.

 

We will continue to work with existing businesses and recruit new businesses to the Cape to ensure that the numbers keep adding up. Looking forward to an even more productive 2016. Have a wonderful holiday season!

 

Sincerely,

 

Dana Brunett

 

City of Cape Coral

Economic Development Manager

 

 

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There are still plenty of Florida Vacation Homes  in Cape Coral for great rates available compared to other cities in SW Florida.

 

 

 

 

Sunday, July 5, 2015

Economists predict rising home prices, rents

 Economists predict rising home prices, rents

 

MIAMI – June 29, 2015 – Spurred by tight supply, both home prices and rents will pick up this year and next, a panel of economists predicted Friday.

By the end of 2017, national home prices should match the levels they reached at the peak of the housing boom in 2006, CoreLogic chief economist Frank Nothaft said at the 49th National Association of Real Estate Editors conference in Miami.

"Consumer confidence is at the highest level it's been in eight years – that's a proxy for financial security," he said.

Nevertheless, when prices do reach past peak levels, they'll still be about 20 percent below that level in inflation-adjusted terms, he said.

Lawrence Yun, chief economist of the National Association of Realtors, expects median home prices to grow 7 percent this year and 4 percent the next.

Still, supply remains tight across the country, Yun said, partly because investors have bought up houses and have not released them into the market, and partly because builders have not created supply quickly enough to meet demand.

However, he projected housing starts would rise from 1.1 million this year to 1.4 million in 2016.

Other panelists said supply also has been constrained by homeowners who are reluctant to move, either because they refinanced at a low rate or haven't found a suitable replacement home.

David Crowe, senior economist at the National Association of Home Builders, said that reluctance to sell an existing home has had an impact on builders.

"New home sales come primarily from existing home sellers," Crowe said.

He expects single-family starts rising from 726,000 this year to 935,000 in 2016.

But builders are still recovering from the recession, and are being further squeezed by higher labor and land costs. Plus, some small and regional builders are having a tough time getting credit through small community banks.

All this means higher prices for homebuyers. But renters have been hit by big price bumps, too.

Stan Humphries, chief economist at Zillow, quoted May statistics that showed rents rising 4.3 percent year over year, while home prices rose only 3.3 percent.

Millennials just leaving their parents' basements, former homeowners who lost their homes to foreclosure, and slow wage growth are all fueling the demand for rentals, he said.

But many are renters out of necessity, not choice, he added, and are giving up basics like trips to the doctor and dentist just to keep up with their rising rents."

"The popular belief is that millennials don't want to buy homes, but our research shows the opposite," he said. "They're more like the silent generation. Their biggest problem is down payments, but since rents are so high, it's hard for them to save up."

 

 

 

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Tuesday, May 12, 2015

Home prices starting to rise quickly again

 

WASHINGTON – May 12, 2015 – The number of metro areas with double-digit price appreciation doubled in the first quarter of this year compared to the quarter before, according to the National Association of Realtors®' latest quarterly housing report.

Strong demand and a tight inventory of for-sale homes for-sale pushed up nationwide home prices. The first-quarter median existing single-family home price rose in 148 out of 174 metro areas tracked by NAR. Only 25 areas recorded lower median prices compared to a year earlier, while 51 metros saw double-digit increases – a sharp increase from the 24 metro areas in the fourth quarter of 2014.

By the end of 2014, home prices had generally moderated to a healthy, more sustainable level of growth – but prices are now picking up again, says Lawrence Yun, NAR's chief economist.

"Sales activity … was notably higher than a year ago, as steady hiring and low interest rates encouraged more buyers to enter the market," Yun says. "However, stronger demand without increasing supply led to faster price growth in many markets. Sales could soften slightly in some of these markets seeing sharp price appreciation unless housing supply markedly improves and tempers its unhealthy level of growth."

The median existing single-family home price in the first quarter was $205,200 nationwide, up 7.4 percent from the first quarter of 2014. Meanwhile, total existing-home sales decreased 1.8 percent to a seasonally adjusted annual rate of 4.97 million over the same timeframe.

Inventories remain tight. By the end of the first quarter, 2 million existing homes were available for sale, with the average supply during the first quarter at 4.6 months – a decline from 4.9 months a year earlier. Most economists consider a 6- to 7-month supply to be a healthy balance between buyers and sellers.

"Homeowners (have accumulated) household wealth through the steady rise in home values in the past few years," Yun says. "However, some homeowners are hesitant to move up and sell, because they aren't confident they'll find another home to buy. This trend – in addition to subpar homebuilding activity – is leading to the ongoing inventory shortages and subsequent run-up in prices seen in many markets."

Source: National Association of Realtors®

 

 

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Sunday, April 19, 2015

Cape Coral positive outlook

Cape Coral recently received strong ratings and a positive outlook, including an A+ from both Standard & Poor's (S&P) and Fitch, and an Aa3 rating by Moody's. These positive rating changes were impacted by the city's strong fiscal management, growth outlook and low unemployment rate which is currently at 4.8%-well below the national and state levels of 5.4 percent.

 

Staff from the Cape Coral Economic Development Office participated in the meetings with the bond rating agencies. EDO staff was able to share details and data about the rapid growth going on citywide, including an increase in commercial permits, up 30% from the previous year.

 

Without a doubt, the city is experiencing excellent growth right now and is expected to continue posting strong returns in the value of residential and commercial properties. As these realities take shape in the marketplace, additional construction opportunities and growth is expected to take place throughout the city. It truly is a great time to be living in paradise!

 

 

 

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Friday, March 27, 2015

Florida has fastest growing U.S. city

 

Census Bureau: Fla. has fastest growing U.S. city

 

THE VILLAGES, Fla. – March 27, 2015 – The Villages, located to the west of the Orlando metro area, grew by 5.4 percent between July 1, 2013, and July 1, 2014, and now has a population of about 114,000. That makes it the fastest growing U.S. city, according to Census Bureau information released yesterday.

Overall, Florida has seven metro areas in the U.S. top 50 for growth over that timeframe.

The Census Bureau released information in December that found Florida had become the nation's third most populous state. The latest demographic info shows how growth in individual metro areas contributed to that expansion.

Florida metro growth

The seven Florida cities in the top 50 for new residents accounted for more than three-quarters of the state's total population gain over the time period:

  • Miami-Fort Lauderdale-West Palm Beach (with a one-year gain of about 66,000)
  • Orlando-Kissimmee-Sanford (about 50,000)
  • Tampa-St. Petersburg-Clearwater (about 41,000)
  • Jacksonville (about 23,000)
  • Cape Coral-Fort Myers (about 18,000)
  • North Port-Sarasota-Bradenton (about 16,000)
  • Lakeland-Winter Haven (about 11,000)

County growth

In addition, eight counties within these Florida metro areas were among 50 counties nationwide that gained the most population between 2013 and 2014.

Collectively, these counties accounted for more than half of the state's population gain over the period:

  • South Florida: Broward (with a population gain of about 24,000 over the period), Palm Beach (about 22,000) and Miami-Dade (about 21,000)
  • Central Florida: Orange (about 26,000) and Osceola (about 11,000)
  • West Central Florida: Hillsborough (about 22,000)
  • Southwest Florida: Lee (18,000) and Polk (11,000)

City growth by percentage

When looking at percentage of growth rather than raw numbers of new immigrants, six Florida metro areas land on the Census Bureau's top 20 list.

Furthermore, six metro areas in Florida were among the 20 fastest growing in the nation between 2013 and 2014. In addition to The Villages, they were Cape Coral-Fort Myers (sixth), Naples- Immokalee-Marco Island (10th), Orlando-Kissimmee-Sanford (16th), North Port-Sarasota- Bradenton (18th) and Panama City (19th).

"Florida's ascension, revealed when the 2014 state population estimates were released last December, was a significant demographic milestone for our country," Census Bureau Director John H. Thompson said. "These county and metro area estimates provide a more detailed picture of how this happened, showing growth in areas such as central and southern Florida."

Migration to Florida from other states and abroad was heavy enough to overcome the fact that in about half the state's counties, there were more deaths than births over the 2013 to 2014 period.

© 2015 Florida Realtors®

 

 

 

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