Governor Strickland to speak at OAR Legislative Conference

Last minute details...members planning to attend OAR’s Annual Legislative Conference, tomorrow in Columbus, will hear Governor Ted Strickland describe his plan to create jobs and revive a sagging economy in Ohio. Please don't forget that he will speak at the Conference’s opening luncheon set for 11:30 a.m. But due to other commitments that afternoon, his address will be given at the start of the luncheon rather than afterwards.

Members should plan to arrive no later than 11:15 a.m. and be in their seats for the Governor’s introduction at 11:30 a.m. sharp. Lunch will be served at the conclusion of the Governor’s remarks, which are expected to be 15 to 20 minutes in duration.

View the Schedule of Events.

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FHA publishes conforming loan limits

The U.S. Department of Housing and Urban Development today published new FHA and conforming loan limits, based on median home prices as mandated by the Economic Stimulus Act signed by President Bush in February. New loan limits for FHA and Fannie Mae and Freddie Mac are now calculated at 125 percent of the HUD published median prices, with a floor of $271,050 and $417,000, respectively, not to exceed $729,750. NAR expects the impact on the housing market to be significant because of the infusion of capital into the mortgage market, which should result in lower interest rates across the board. In addition, there will be a direct impact on high-cost areas that previously required borrowers to take out costlier jumbo mortgages. The new FHA loan limits can be accessed online. To find the Fannie Mae and Freddie Mac conforming loan limits, on the HUD site choose "Fannie/Freddie" in the drop-down menu called "Limit Type."

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IRS issues real estate fact sheet

The Internal Revenue Service has issued a fact sheet for real estate practitioners. The information highlights how to avoid problems, tax laws and regulations, trends and statistics, an audit technique guide and general tax tips. View guide...

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Regional home maintenance guidelines

Being a homeowner comes with its own set of challenges, particularly as it relates to home maintenance. The American Society of Home Inspectors (ASHI) recognizes that geography is a significant contributor to maintenance issues and encourages homeowners to familiarize themselves with common issues in their region.

While some maintenance issues, such as poor drainage, leaky roofs and old plumbing are common to all areas of the country, others are driven by geography, climate, weather conditions and the quality of the contractor who built or renovated the home. Below is a snapshot of prevalent maintenance issues homeowners should look for.

Regional defects in the Midwest

1. Water intrusion is a common issue for homeowners in the Midwest. Wood rot is very common in trim and siding. The prevalence of basements in this region also makes it a hot spot for water intrusion.
   
2. Plumbing issues are also prevalent. It’s not uncommon to see water heaters serving as both a furnace and water heater. Issues arise, however, when plumbers forget to attach venting fixtures or drains when new water heaters are installed.
   
3. Decks are another area of concern. This widely enjoyed add-on can be attached incorrectly when built by eager Do-It-Yourselfers.

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Why you should care about Wikis

The wiki movement is steadily taking over the Internet--or, rather, wikis are allowing millions of everyday people to take control of the Internet and create it themselves. Online collaboration might be the next cornerstone. Should your company have its own wiki?

Unless you've been living under a rock somewhere for the past couple of years, you've probably heard about the concept of a wiki.

Despite the term appearing constantly throughout most technology-aware media, many people still don't fully understand what the concept means or, more specifically, how it can be used effectively.

Nuts and bolts
A wiki is simply a Web site that allows a community--large or small--to add content to a collection of pages easily and generally provides a facility for documenting the changes that happen, when they happen and who makes them.

The term wiki comes from the Hawaiian word wiki, which means "fast." In the wiki's most open format, anyone can go to a Web site that focuses on a particular topic and either add content to existing pages or create their own. In the more common format, a wiki requires some sort of authentication and login to prevent people from abusing the open media for purposes of vandalism or free advertising.

People often use the terms wiki and blog together. For the sake of clarity, a blog, or Web log, is a Web site that allows one or more people to create diary-style entries that generally follow a timeline. Both tools typically provide simple interfaces that allow non-technical people to create relatively sophisticated Web resources, but they generally serve different purposes.

Why Wiki?
The main benefit of a wiki is that a company can start creating a compendium of knowledge. Rather than try to create a complete and perfect resource, they can allow their agent/customer/client community to maintain, fix, edit and grow the library.

For example, a company might create an FAQ about the real estate industry . Who better than your agents to populate and maintain this resource?

The main benefit, other than the general value of its content, is that the content is largely developed for free by agents and consumers who gain a greater sense of your company.

See samples
To learn about wikis and see them in action, you can visit the Wikipedia, which is a wiki that is largely an online dictionary and encyclopedia that uses the wiki concept for contributions.

When you visit the Wikipedia and search for an article, you will see "edit" links on the page, where you can add or edit your own entries. The Wikipedia has a large cadre of volunteers that routinely monitor the changed entries for vandalism or other harmful content. If an effort this large can be maintained strictly through unaffiliated volunteers, imagine what could be done with a smaller project.

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IRS provides guidance on vacation home exchanges

Until now, the issue of whether a vacation home qualifies for tax deferral treatment under IRC §1031 was the subject of much scrutiny and uncertainty. To the delight of many tax practitioners, on Feb. 15, 2008, the IRS eliminated that uncertainty by issuing Revenue Procedure ("Rev. Proc.") 2008-16, effective March 10, 2008, which provides a safe harbor for exchanges of vacation homes (defined as "dwelling unit" in the Rev. Proc.). Now taxpayers can have a clear understanding of the circumstances under which the IRS will not challenge whether a vacation home will qualify as property "held for investment" under §1031.

Vacation home as relinquished property
For a vacation home to qualify as relinquished property, it must meet the following criteria:

1. It is owned by the taxpayer for at least 24 months immediately before the exchange ("qualifying use period"); and
2. Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit at fair rental to another person for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental value.

The first 12 month period immediately preceding the exchange ends on the day before the exchange takes place (and begins 12 months prior to that day). The second 12 month period ends on the day before the first 12 month period begins (and begins 12 months prior to that day).

Vacation home as replacement property
For a vacation home to qualify as replacement property, it must meet the following criteria:

1. It is owned by the taxpayer for at least 24 months immediately following the exchange ("qualifying use period"); and
2. Within the qualifying use period, in each of the two 12 month periods, (1) the taxpayer rents the dwelling unit to another person at fair rental for 14 days or more and (2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12 month period that the dwelling unit was rented at fair rental.

The 12 month period immediately after the exchange begins on the day after the exchange takes place and the second 12 month period begins on the day after the first 12 month period ends.

Personal use is defined broadly. Use by the taxpayer or other person having an interest in the dwelling unit and any family member¹ will be considered "personal use" by the taxpayer. Also, any arrangement whereby fair market rent is not paid will be considered "personal use" by the taxpayer. Notwithstanding the foregoing, use by family members will not be considered "personal use" by the taxpayer only if the dwelling unit is rented at fair market rent and the family member uses it as his principal residence.

Fair rental. Fair rental is based upon all of the facts and circumstances that exist when the rental agreement is entered into. All rights and obligations of the rental agreement are taken into account.

Note special rule for replacement property. If the taxpayer files a return reporting a transaction under §1031 based on the expectation that the dwelling unit will meet the qualifying use standards and subsequently determines that the dwelling unit does not meet the qualifying use standards, the taxpayer, if necessary, should file an amended return.

Exchanges of vacation homes outside the Rev. Proc. 2008-16 safe harbor. An exchange of a vacation home may still qualify under §1031 even though it falls outside the parameters of Rev. Proc. 2008-16. Any such circumstance will be subject to greater scrutiny and therefore should be carefully planned and reviewed by the taxpayer’s tax advisor.

¹ Brothers and sisters (by the whole or half blood), spouses, ancestors and lineal descendants.

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Tech Tips

Education

Post Licensure Course for Salespeople...OAR will offer the 10-hour Post Licensure course March 19-20 at OAR headquarters in Columbus. This course is required for all newly-licensed salespeople within the first year of licensure. Early-bird registration applies. No c.e. offered. Sign-up today...

Attacking & Defending an Appraisal in Litigation...This 14-hr. course will cover common mistakes made in appraisals and how to testify if called upon. Various standards and ethical rules that are commonly misunderstood are also highlighted and explained. Dates: March 26-27 in Columbus. Sign -up today...

30 hours online...Take your real estate continuing education hours online. You can take 3, 6 or all 30 hours in any combination...Sign-up today...

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