7 Critical Considerations for a Real Estate Investment Property Purchase

If you are considering an buying an investment property, there are 7 important items to consider.

1. Financing, typically lenders will only lend up to 65 percent of the value of the property when it’s for investment purposes. This limit is in place because lenders consider an investment property a higher risk

If you have equity in your current principal residence or in other property, then you may wish to borrow from those sources to maximize your mortgage and financing Generally speaking your investment property. The reason for this objective is because you are allowed to use mortgage interest paid on your investment property to reduce the amount of income and hence tax paid on your investment property.

2. Another important consideration for your investment property is choosing the best location. If you are considering a townhouse or a high-rise condo for your investment, then you want to ensure that it is located close to major shopping, transportation and schools and amenities that will appeal to prospective tenants. Often tenants will only have one vehicle and require these types of amenities to be located close to the property. You will usually get higher rent when your location is desirable.

3. Generally speaking, a high-rise condominium will allow you the most flexibility and least amount of effort and maintenance during the tenancy compared to any other type of property. Once a high-rise condo is rented, it is nearly a hands free investment. This does not come without any cost, as the maintenance fees associated with a high-rise condo will be much higher compared to a townhouse or other type of property. Your second choice for maintenance free investment property may be a townhouse. The reason is that all of the exterior maintenance, such as snow shovelling and lawn and garden maintenance will be taken care of by the condo corporation and not the tenant. The only items that you and/or the tenant will have to take care of are the interior items and these are usually minor in nature.

A freehold townhouse, semi or detached home will require more maintenance and effort on your part and the tenant throughout the year. This may be more desirable or not, depends upon your circumstances. Many investors choose freehold properties for their investment properties as they have the time or prefer to do some of the maintenance themselves or at least have control over the entire property compared to condo type properties.

4. As a continuation of the items considered in number 3, these different properties will appreciate at different rates, all things being equal. For example, if a high-rise condo has an appreciation of 10% in a year, then a townhouse may appreciate 12 to 14% and a freehold property may increase 15% or more. This larger appreciation would be offset by the fact that more maintenance may be required by you the owner.

5. It is important to consider all the expenses when you purchase an investment property. The obvious expenses are the principal and interest costs associated with the mortgage or financing on the property, the annual taxes and any monthly maintenance fees if the property is a condominium.

You may wish to consider regular maintenance items to protect the value of your investment property and the systems that are associated with your property. Other expenses you may incur are regular maintenance items such as furnace cleaning and maintenance and inspection. This is a very important item if your investment property is a freehold. Other items such as the condition of the roof, foundation, interior and exterior walls and windows, appliances, lighting and window coverings, electric garage door openers and any other systems or items that are mechanical in nature should be checked on a regular basis to not only protect the value of your investment but also to prevent the failure of these items as opposed to regular maintenance.

6. Once you have purchased your investment property your other major consideration is finding a good quality tenant. In my nearly 20 years of experience I have found that there are two major considerations in your tenant. The number one consideration is that you find a tenant who has the ability to pay the rent and if possible can show a good history of paying the rent. The second most important item is to make sure that your tenant will take care of the property for you in your absence.

Other items you will have to consider are that you must investigate the credit worthiness of the tenant, their personal and credit history, their employment status and confirmation of employment. You may contact their previous landlord and personal references that they supply on the application. These items can be critical and will give you insight into your prospective tenant. In my experience, the degree to which a prospective tenant completes all fields on a rental application and provides all the information you request and is straightforward and forthright with all answers to your questions and inquires will give a good indication of the quality of the tenant that you are looking at.

7. You have to decide to find the tenant yourself or use a real estate agent. When you attempt to find the agent yourself, you can personally meet the tenant ahead of time and see the type of people that will occupy your property. You will have to do all the credit and personal investigations of the tenant. I have found that when you use a real estate agent to find a tenant for your property, the quality of the tenants are usually better than through private means. The reason for this is that tenants who are relocating with their company or those tenants that have better employment and personal history know that the properties on the mls are better compared to the private properties and will utilize the mls to find their property. As well, the mls is a much more efficient method of finding a rental property and many tenants use the mls to find their next rental.

Of course, a real estate agent can find you a good quality tenant and perform all of the credit and personal investigations on your behalf. In the Toronto and GTA, the typical fee to have your property rented through the mls is one months rent commission.

Conclusion

As you can see, there are many important items to consider with an investment property that you are considering to purchase. Your personal situation, financial ability and degree of involvement in your investment property will ultimately determine the type of property that you will purchase.

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All You Need to Know About Affordable Home Insurance in Edmonton

Why You Should Get a Home Insurance Quote in Edmonton

· To avoid overpayment and save a significant amount of money

· Insuring your house, cottage, or rental includes protection from flooding

· To get any information about home insurance from a live agent

· To get a quote from 10 insurance companies

Sample Home Insurance Quotes in Edmonton

Example 1: Insurance on a two-story house in Allendale, about 2,000 square feet, including flooding coverage, costs around $93 a month, or $1,116 annually.

Example 2: Insurance on a condo with two bedrooms in the downtown area of Edmonton, near Canadian Western Bank Place, costs about $22 a month, or $264 annually.

Example 3: Insurance on a one-story house near the intersection of 107 Ave and 142 St NW, in the Grovenor neighbourhood of Edmonton, costs $65 a month, including flooding protection, or $780 annually.

Home Insurance Premiums in Edmonton – Average Rates

Home insurance policies change for different types of properties. Tenant insurance (also called renter’s insurance) only covers the contents of a rented house and, depending on the policy, liability. The homeowner’s coverage, on the other hand, is focused on the insurance of the building itself to ensure protection in instances that are related to natural hazards, fire or earthquake, or due to unlawful human activities like vandalism.

Home insurance covers the rebuild value of a dwelling, but not the market value, which is, in fact, higher. That is why, when the property has undergone some damages, the insurance provider will carry the rebuilding costs so the policyholder is able to restore a corresponding property.

This chart features the average premiums for rented and homeowner’s insurance in Alberta and Canada. As the chart shows, owned property insurance is, on average, higher than the renter’s policy.

Condo and Tenant Insurance Policies in Edmonton

Condo owners in Edmonton are protected by their own condo insurance policy, which they must buy, and the condominium corporation’s policy, which the corporation must buy. The first one covers the contents of a condo, modifications, theft, liabilities of a third party, locker contents, additional expenses and insurance assessments. The second type, the condominium corporation’s insurance, provides coverage for exterior parts of a building, like the roof, infrastructure (the building envelope) and areas like halls, lobbies, elevators and so on.

Condo tenant insurance, which is insurance of a rented condo, provides protection of the contents in case it is damaged as a result of theft, fire, etc. This type of policy also covers third party liability and additional living expenses. For example, if your condo was damaged due to fire or flooding, making it unsuitable for living, your condo tenant insurance in Edmonton can cover your temporary stay at a hotel room or rental unit.

8 Ways to Decrease Costs for Home Insurance in Edmonton

1. Quit smoking. Since smoking can pose a danger to your lungs and health overall, and since it also creates a higher risk of fire inside a house, insurance companies don’t welcome this habit, so they increase premiums for home insurance.

2. Choose a safe area to live in. Be careful not to buy a house in flood-prone or earthquake areas as the risk of damage to your house is double, and so are your premiums.

3. Check for recent claims because, if you have not made one for a long time, you can get a discount. However, not all insurance companies in Edmonton provide such an option, so you should ask around to be sure.

4. It is time to upgrade your home since houses that are well maintained get much lower premiums in comparison to ones that are very old and in poor condition. Be sure that when you spend money on upgrading any part of your house, like the bedroom or basement, you save on your home insurance by reporting the upgrades. In fact, call your insurer before you start and ask how much you can save!

5. Get alumni discounts. If you are a graduate of some post-secondary institutions, like McGill University or the University of Toronto, you can get alumni insurance discounts. Check with your university to see if it provides this advantage.

6. Union memberships may include insurance discounts. Some large corporations or unions also provide their members with insurance policies.

7. Take care of your plumbing since many insurance providers prefer copper and plastic pipes to the galvanized or lead ones. Perhaps one of the renovations for your home will involve upgrading the plumbing because, in Edmonton and Alberta, this will mean lower premiums for your home insurance.

8. Read consumer reviews. Consumer reviews help you choose among the variety of insurance providers in Edmonton to find the one that will be suitable for you in terms of finances and your situation.

Who’s at Your Front Door – The Convergence of Security and Concierge Services

Security officers and concierge personnel have been an integral part of residential operations for a long time. Some complexes and buildings were large enough to have separate departments that served their tenants while others had to choose to have either a security officer or a concierge. Without the option of hiring both, residences lacked a full-service program. This article will detail a dual-role concierge/security officer program, will cover why it isn’t the standard the residential industry, and explain how this benefits the tenant and visitor experience.

The impact of having the dual role concierge/security officer will be seen in the residences’ overall safety, customer satisfaction, and cost-savings. Property management firms and residential owners shouldn’t have to choose whether they value a secure environment or a welcoming environment when both are possible with a properly trained and licensed security concierge.

An initial step in developing a full service tenant program for residential owners and property management firms is to combine the two departments by hiring licensed security officers who are trained as concierge personnel. This full-service professional must have the requisite skills and knowledge of both professions and be able to adapt to a variety of complex situations and incidents. The dual role concierge/security officer must possess the excellent customer skills of a concierge and the regulation enforcement of a security officer; the ability to make reservations and the ability to respond to emergencies; the care and cooperation of a concierge and the crime prevention of a security officer. In order to be successful with this service an intricate training program must be established which focuses on security and concierge skills as a unified style of service not as separate roles. The service provider must have experience with both services and have an officer developmental program.

Why haven’t many security firms or concierge services gone to the dual role officer? Security firms haven’t gone to this model because of the training demands, accountability, and the necessary wage structure to provide the level of quality customer service and protection expected by tenants in a residential environment. Concierge firms haven’t gone to this model because of the liability and cost of licensing their personnel as security officers to monitor cameras and respond to emergencies. The increased risks of terrorism and crime require security officers to receive more diverse training in emergency first response, life safety procedures, and overall crime prevention. Gone are the days when security officers were counted on for merely contacting 911 and waiting for law enforcement and EMS to respond. Security officers must now be first responder certified and trained in homeland security defense to protect the lives of the people they serve.

Concierge personnel have been known to assist residents with any and all requests for services needed, although, there is a void between the emergency response capability of the concierge and the security officer. The dual-role officer can assist with anything from monitoring closed circuit televisions and filing police reports to offering information on local nightlife, making reservations and coordinating grocery delivery. Services like these are commonplace in the hotel industry and should become the benchmark for residential buildings offering luxury services.

What will this convergence bring to a residence? A cost-benefit analysis of the dual role officer can easily justify the conversion. Owners and residential operators with front desk personnel can incorporate the security and concierge function into one operational expenditure of their budget. Security firms must increase their customer service training and service programs but need not incur any cost of increased licenses. The end result will be increased tenant satisfaction, improved safety and security, and most importantly peace of mind.

There has been a growth towards the dual role concierge/security officer in many organizations but many of these attempts have not been an integration of the best practices of security and concierge but a selective combination of the two disciplines. The responsibility lies on the service providers to integrate both training programs without losing any of the qualities of each role. The proper management structure and wages will allow property managers and owners to hire the professionals necessary to institute this important balance.

Taxes – Association Rules for Capital Gains and Losses

Below is a look at two different aspects of association capital gains and losses that our firm has had to deal with this tax season. The concepts are interesting primarily because their tax answers are so different from what our association clients expected. Also, our clients had to do some homework before we could determine the answers.

Have you ever lost money on an investment when the market moved against you? Investment losses – nobody wants them. But when this happened recently to several associations, they told us that at least they could deduct those losses – right? Wrong! The rules for capital gains and losses for associations are different from those that apply to individuals.

On a slightly different topic, it can be easy to think it’s really a simple question when your association has a capital gain on the sale of property – but that’s only if you know the answers to these questions:

  1. Who is REALLY the taxpayer?
  2. What is the tax basis in the property sold?(This will probably surprise you.)
  3. Was this a complete or partial sale? (Didn’t see that one coming, did you?)
  4. What did you do with the sale proceeds?

We have worked with several associations already this year that have incurred capital losses on their investment activities. In each case, the associations had invested in interest rate-sensitive investment vehicles, particularly U.S. treasury bonds. Interest rates on treasury bonds have been at the lowest point ever in recent years, but have recently experienced some significant (percentage) rate increases. When this caused the value of existing low-interest bonds to plummet, these associations panicked and sold the bonds to avoid further losses. By doing so, they incurred capital losses.

Capital losses are a significant problem for associations, as they are not treated like any other form of income or expense. For corporations, the rule is that capital losses may not be used to offset other regular income, but can only be used to offset other capital gains. What this means is that an Association with a $10,000 capital loss from investment activities may generally not be able to use this loss on its tax return. The loss must be carried back three years and may be carried forward for a period of five years, but may only be used to offset past or future capital gains. For most associations, this means it is lost forever.

Moving on to capital gains, another association recently posed a question regarding a significant capital gain from the sale of common area property. Their take on the matter was that since they consider themselves to be a nonprofit organization, they should not have to pay any tax on the gain resulting from the sale of this property. They also considered it to be such a simple matter that they were going to have the association treasurer just show no gain on the Form 1120-H tax return. For this association, taxes had always been such a simple matter that they had always prepared their own tax return. This year, since they had this sale of common area property, they thought they should at least ask the question. As soon as we started asking them questions about the gain, however, they realized they were in way over their head on this one.

Before an association can properly reflect a capital gain on its tax return, its board of directors need to know the answers to the following questions:

  1. Who is REALLY the taxpayer?
  2. What is the tax basis in the property sold?
  3. Was this a complete or partial sale?
  4. What did you do with the sales proceeds?

Who is the taxpayer? While that may seem like a dumb question with an obvious answer, it’s amazing how many people can’t answer the question. If the Association is a planned development that holds title to its common area property and is selling a parcel of property to which it has title, then the answer is simple: the Association is the taxpayer. If, however, the Association is a condominium association, which generally does not hold title to its common area property, then it becomes a more complex question.

If it is determined that the Association is the titleholder of the property, then the Association is the taxpayer.

However, in the more common circumstance where the Association is simply acting as the agent for the members of the Association, then the members of the Association are the taxpayers, not the Association. If you have determined that the members of the condominium association are in fact the titleholder to the property, you are then led to the remaining questions two, three, and four above.

Tax Basis. Assuming the Association is a planned development, or a condominium association in which it is determined that the Association itself is the titleholder of record, this is a taxable transaction that must be recognized on the Association tax return. That makes the tax basis very important. There are generally only three possibilities for determining tax basis:

  1. If the Association purchased the property it later sold, the tax basis is the purchase price plus any subsequent capital improvements made to the property.
  2. If the developer transferred the property to the Association while it still retained at least 80% control of the Association, then the Association has the same basis in this property as it had in the hands of the developer, assuming that the developer did not take a deduction for this property on the developer’s tax return. And that is generally an unknowable fact, particularly 20 years down the line.
  3. If the developer transferred property to the Association at a point in time in which it no longer retained at least 80% control of the Association, that is generally considered a contribution to capital and there would be no tax basis in the property.

For a condominium association that does not hold title to the property sold, the members are the taxpayers, so this sale is NOT reported on the Association tax return. Because the Association acted as an agent for the members in facilitating the sale, however, it does have an obligation to disclose to its members the information THEY may need to report. Each member-owner is going to have a different tax basis. The Association will never know this information.

Complete or partial sale. If the sale of a common area parcel does not completely terminate the members’ interest in the Association, then it is a partial sale. In the case of a partial sale, the rule is that any net proceeds received from the sale first reduce tax basis, then are recognized as capital gains to the extent that sales proceeds exceed the tax basis (Revenue Ruling 81-152). The Association generally should be able to determine if the transaction is a complete or partial sale as it affects members.

What did you do with the money? This becomes a critical question when there is a partial sale, as the overriding assumption is that the sales proceeds will represent a reduction in basis to the members. It is not uncommon, however, for the Association to retain the proceeds to either shore up the operating budget or apply toward specific capital reserve projects. The tax treatment for the individual members depends on how the Association uses that money. There are generally three possible uses of sales proceeds:

Proceeds are distributed prorated to the members.

Proceeds are retained by the Association to be used in the operating budget.

Proceeds are retained by the Association to be used for capital reserve projects.

If the money is either refunded to the members or is held by the Association and expended for operating budget purposes, then to that extent the members will have a reduction in tax basis for their distributable share, even if they did not receive the money.

If instead the money was retained by the Association for capital reserve projects, this represents an increase in tax basis for each individual member. What that means is that if the full amount was used for capital reserve projects, there is no net tax impact to the individual members, as the sales proceeds which reduce basis are offset by the reserve contribution which increases tax basis.

Notice to members. If the Association is the taxpayer, there is no need for disclosure to members. But if the Association is a condominium project that does not hold title and is not reporting the sale, then the Association has the obligation of notification and disclosure toward the members, no matter how the proceeds are used. A word of caution: the Association should not be in the business of dispensing tax advice to its members. Our standard recommendation in this instance is that the Association should notify its members in writing that the sale has occurred, disclose the gross proceeds received, and inform how the proceeds were used. In our clients’ situations, since we are generally involved as the tax advisor at this point, we suggest that the notice to members also states that the Association’s accountant believes that this is a possible taxable event for each member, and that they should contact their own tax advisors to determine appropriate tax treatment. The notice could describe the basis issues above.

As you can see, what can seem like a very simple little question regarding the sale of the property is, in fact, a very complex tax issue that generally requires a seasoned tax professional to review and understand its possible tax impact to the Association. This is generally not the type of an issue that a board treasurer filing a tax return on behalf of the Association should handle himself or herself.

California Tax Issues

California taxation of homeowners associations is still a mystery to many people. That’s because the rules are a little complex, especially as compared to taxation of individuals in the state of California. Let’s look at the basic rules that apply to taxation of California homeowners associations.

  1. All corporations in California are automatically subject to the franchise tax unless they are exempt from taxation under one of the subsections of revenue and taxation code section 23701. The franchise tax is essentially a tax on gross receipts less allowable deductions. One of the key applications of this concept that potentially affects homeowners associations is that U.S. Treasury interest, which is generally considered exempt interest income under income tax rules, is taxable under the franchise tax rules.
  2. Corporate homeowners associations can apply for exemption under Revenue and Taxation Code section 23701t. This requires filing exemption application Form FTB 3500, which is a significant process in itself. It also means that the Association must meet the qualifications set forth in that section of California code. The benefit is significant because exempt associations are subject to the income tax rules rather than the franchise tax rules. What this means is that U.S. Treasury interest for an exempt Association is not considered taxable income.
  3. Qualification under Revenue and Taxation code section 23701t is roughly equivalent to qualification under Internal Revenue Code section 528 for federal tax purposes. That means if an Association can qualify to file Form 1120-H, it generally can also qualify for exemption under California law.
  4. However, there are some differences between federal and California law. One difference is that cooperatives may not file Form 1120-H, but will still qualify under Revenue and Taxation Code section 23701t for California purposes.
  5. Another difference relates to unincorporated associations, which are automatically subject to the income tax rules rather than the franchise tax rules for purposes of California taxation.
  6. All corporations are required to file Form 100, which reports all taxable activities. Exempt Associations are also required to file Form 199, which reports all exempt activities. While FTB allows a “postcard” filing of Form 199 online, many associations still prefer to file the paper form both as proof of filing and for an internal record.

The California Franchise Tax Board (FTB) has long had a policy of suspending corporate status for associations that either failed to file tax returns, or failure to file the biennial statement of officers with the Secretary of State’s office. Failure to file any of the tax forms or officer notice can result in suspension of the Corporation. While that has certain legal implications, such as the inability to legally contract for services, and the loss of rights to the name of the corporation, it also has a financial impact.

The Franchise Tax Board in recent months has been very aggressive and also revoking exempt status for corporations that have been suspended for any reason. The impact of this is that the Association must not only supply any missing tax returns or statement of officers, but they must also file a “Certificate of Revivor” and a new application for exempt status on Form FTB 3500.

Exacerbating the situation is the fact that the Secretary of State is not particularly timely in posting its receipt of the statement of officers. This has resulted in two situations in our firm where associations have had their exempt status revoked and have been suspended, when in fact they had made all timely filings. We recently dealt with an association that had its exempt status revoked and placed on suspension in July, because the Secretary of State failed to post notice that the statement of officers had been received in May. In this case there was about a six-week time delay in the posting of the notice, and FTB happened to take action during that six-week period. The matter was easily resolved by a single phone call to the tax practitioners Hotline with FTB and working through the situation. However, if someone were relying strictly on the positions taken by FTB without challenging them, it would have resulted in an extensive effort by the Association and significant cost in re-applying for exempt status.

The caution to associations is to not blindly accept the positions of the Franchise Tax Board if you believe you have filed all necessary forms with the State of California.

Associations can check their corporate status on the California Secretary of State website at http://kepler.sos.ca.gov/.

This does not allow you to check exempt status with Franchise Tax Board. but it will at least let you know whether your corporation is active or has been suspended.

The ARTE Condominium – Luxury Penthouse, Homestay & Investment

The ARTE is a premium luxury condo with penthouse suites located at Thomson Road.

Its smallest unit are 2 bedrooms and the largest units are Penthouses.

To get around town, the nearest MRTs are Novena and Toa Payoh. The Arte is a 16 minute drive away from Singapore’s shopping belt. This allows the developer to price this luxury condo at an attractive rate. A luxury condo such as this built in the city would be over budget for most.

The ARTE has 2 blocks, blocks 21 and 23.

Here’s a break down of the units available.

2 Bedrooms Size = 1055sqft

3 Bedrooms Size = 1625sqft

3 Bedrooms = 1528 sqft

3 Bedrooms = 1399 sqft

4 Bedrooms = 1873 sqft

Next, we have The ARTE’s luxury penthouses.

Penthouse

There’re a few types of Penthouses available, all of which are fairly priced. If you pay more, you get a suite that is on a higher level and bigger.

Penthouse type PHD = 2896sqft Double Storey. Total 8 units

Penthouse type PH1 = 2648sqft Double Storey 2 units

Penthouse type = PH2 2680sqft 2 units

Penthouse type PH3 = 2820sqft 2 units

Penthouse type PHG1 = 4015sqft 2 units

Penthouse type PHG2 = 3810sqft 2 units

The best suite is Penthouse type PHG1, a 4051sqft luxury penthouse. It has 3 stories, inclusive of 1 roof garden. One good thing about this penthouse is the junior suite on the 1st floor that has its own bathroom. Going up and down the stair case is difficult for senior citizens. This extra room is good for families that have elderly who find it more convenient staying on the ground floor.

Popular Units

– if you’re family oriented with 2 children seeking homestay, the popular units are the 2 and 3 bedrooms types located from the 19th storey to 30th storey. These units offer the best blend of view as well as size. Savvy investors also know these have high rental yield and will snap these up quickly

– if you have parents living with you, then consider the 4 bedrooms. The ARTE has some spacious quarters here that will not disappoint.

Important Tip:

Popular units are often snapped up quickly. Smart buyers often try to find out when the private launches are because the best units are transacted, bought, sold in real time before the actual launch. If you are privy to this information, you can sometimes get the best units at a cheaper $10-$25 psf, which can add up to paying $40,000 less for your favorite unit!

Closing Thoughts

The ARTE is popular amongst families that are looking for homestay because of its fair blend of mix between price, location, luxury feel. If you like cluster homes, a good condominium such as THE ARTE can more then easily hold its own against the luxury cluster homes of Singapore. The penthouses here are pretty amazing, if you are searching for a high quality premium penthouse, be sure to learn more about this luxury home at PropertyShowrooms.sg

Making the Revenue Ruling 70-604 Election

Revenue Ruling 70-604 states that “a meeting is held each year by the stockholder-owners of the corporation at which they decide what is to be done with any excess assessments… “.

This wording is generally interpreted literally to mean that only the members can make the election. The board of directors cannot make the election. This interpretation places the election approval process directly in conflict with state law (for at least every state in which I have researched this issue), which prescribes that only the board of directors may make decisions regarding disposition of association funds; the members cannot do so. That’s why directors were chosen to represent them.

Associations continually tell me that they can’t get a quorum of members to make a legal vote, or that they have difficulty getting the members to approve an election under Revenue Ruling 70-604. The follow-up question is, “Can’t we just have the Board of Directors make the election?”

The answer is probably yes, but that depends on how much risk you want to take or how much money you want to spend fighting the IRS on this issue. An argument made out of context to the IRS that “the board must make the election because only they have the authority to do so” is a losing one. (If you don’t believe me, just ask any IRS agent.)

The IRS interprets this Ruling very literally to mean that the stockholder-owners must make the decision, because that’s what the Ruling says. The IRS is bound by the Internal Revenue Code and Federal Court cases, but is not bound by state law, non-judicial precedent, or any other precedent except those of their own making. The IRS must follow its own Revenue Rulings whenever they apply to a given situation.

The IRS doesn’t care what state law stipulates, or who has the actual authority to make a decision regarding the disposition of association funds. They only care what their Ruling says, and it says “stockholder-owners,” not directors. However, the phrase as stated by the IRS makes sense ONLY if the members have the authority to determine the disposition of association funds.

It takes only a subtle change in interpretation to change the face of the argument entirely. When working under Revenue Ruling 70-604, pay careful attention to the subtleties of phrasing: “A meeting is held each year by the stockholder-owners of the corporation at which they decide what is to be done with any excess assessments… ” The phrase “they decide” clearly implies that the stockholder-owners have the authority to make the decision. In fact, they don’t. The IRS was simply unaware of this aspect of association governance at the time the Ruling was issued.

I discussed this issue several years ago with the national office of the IRS, and they conceded that their only interpretation was a literal one, meaning the members had to make the election. I suggested an alternate interpretation: “A meeting is held each year by the individuals in the association who have the authority to make the decision (the board of directors) at which they decide what is to be done with any excess assessments… “. The IRS agreed that my interpretation had merit because the Ruling has no basis if the individuals making the election do not also have the authority to determine the disposition of association funds.

Winning an argument with the IRS isn’t done by telling them that their Revenue Ruling is wrong. Winning the argument is done by showing them how their Revenue Ruling really conforms to the facts. The board makes the election because they are empowered to do so, and that’s what the Revenue Ruling says (in substance, not literally).

Having now discussed the issues, what is an association to do? Well, do you want to comply with what the IRS requires and have the members make the election, or would you prefer to fight them and have the board of directors make the election?

The fact is, you can take a simple action to satisfy both state law and IRS requirements.

I recommend to clients that the members make the election, usually at the annual meeting, although any legal vote of the members will suffice. Then, have the Board ratify that election at their first meeting after the annual meeting. That way, you’re covered no matter how you interpret the ruling.

What Are the Different Types of Condos?

When we are talking about condominiums in Singapore, there are basically 3 types – mass market, mid-market and the high-end condominiums. Whether to choose which type of condo really depends what you are looking for and what is the purpose of this investment.

Mass Market

Typically the mass market condos are located at the suburbs, such as Bishan, Jurong, Yishun, Pasir Ris and Chua Chu Kang. These condos are usually priced starting from $600 psf and have basic condominium facilities such as swimming pools, Jacuzzi, gymnasium, BBQ areas, car park, and 24-hours security. This type of condos is good for people who wanted to enjoy condo facilities and it is a lower entry to condos in Singapore.

Mid-Market

Mid-market condos are situated near the fringes of the prime districts. Some of these areas are Novena, Newton and Bukit Timah. Their prices are also slightly higher (about $800psf) and they often have additional facilities such as tennis courts, squash courts, sauna, fitness corner, function room, and basement carpark. These condos are suitable for buyers who want to have good locations as well as having this condo as an investment in mind.

High-End Market

Needless to say, high-end condos are at prime-districts such as Districts 9 to 11 – places such as Orchard Road and Sentosa Cove. The prices for these condos are definitely high. They can range from $1000psf to even $3000psf, depending on its exclusiveness and facilities. Some of these condos even include a sky gym, concierge service, private lifts, and even a marina to dock your yacht. High-end condos are definitely for the elites and the rich. For those who are interested in investing, these high-end condos may be a good choice too.

Mclean Virginia Real Estate – The Apartment & Condo Communities of Tysons Corner

Below are housing options every current and new resident to Tysons Corner should consider.

Tysons Corner VA Condo Communities The Fountains at Mclean – Built in 1988 this luxury condo community in Tysons Corner is located within walking distance to the Tysons Corner Mall, Freddie Mac and the Tysons Westpark Transit station. Busses from this station leave frequently for Weshington DC, the West Falls Church metro, Arlington and Reston Town Center. The Fountains (FAM) has a long standing reputation as one of the best investments in Tysons Corner. The community is know for it’s stepped, three level fountains located on the grounds and major common areas. Spacious one and two bedroom units with underground parking, on-site fitness facility, pool, tennis courts and clubhouse make FAM one of the most desirable communities in Tysons. The Fountains at Mclean offers condos for sale starting at approximately $260,000.

The Gates of Mclean – This community is located close to the intersection of 123 and 495 (the beltway). It boasts accessibility to the major thoroughfares of Tysons Corner. The community spent a short stint as apartments and then went to condo ownership a few years after. Well known for its clubhouse with 30 foot ceilings and a state of the art theatre, exercise facility, and pool…the Gates of Mclean caters to the discerning residents of Tysons. The community has one, two, and three bedroom condos of varying sizes from 600 sq ft to over 2,000 sq ft. The condo fees range from $260 monthly to approximately $400 and are considered highly competitive for Tysons Corner.

Lillian Court at Tysons Corner – This closest of condo communities to the Tysons Corner mall is located on the corner International Drive and Tysons Boulevard. Lillian Court offers one, two, and three bedroom condos as well as townhouse style living. Condo fees are low and as one of the more prestigious communities in Tysons many owners have upgraded their units with hardwood flooring and stainless steel appliances. The community offers underground parking for many of the units. Higher level condos at Lillian Court have some of the most coveted views in all of Tysons.

The Rotonda – As the largest condo community in Tysons Corner, The Rotonda boasts 37 acres of walking trails, an underground bowling alley, a salon, indoor pool, onsite community store. The Rotonda is a favorite among senior residents who want to be close to the action. Condo fees are high…but well warranted due to the plethora of community amenities. Apartment rentals as opposed to condo purchases are most popular at The Rotonda because this way the owner pays for those high condo fees and the tenant gets to enjoy those amenities free of charge.

The Encore of Mclean – As the one of the largest and oldest condo communities in Tysons Corner this community boasts a fleet of amenities. Secure, gated, with 24 hour concierge, The Encore has built a reputation in Tysons Corner since the 1970s. Its sister complex, The Regency at Mclean offers the same amenities and is located directly in front of the Encore. Together the Encore and Regency boast over 400 units.

Mclean VA Apartment Communities

Post Tysons Corner – This apartment community is the sister complex to the Fountains at Mclean, however, Post Tysons Corner consists solely of rentals. Located side by side next to the Tysons Corner Mall the Post Tysons Corner complex enjoys the same amenities as the Fountains at Mclean: the clubhouse, pool, tennis courts and fitness facility. Rents at Post Tysons Corner tend to be higher than those from individual owners at the Fountains at Mclean because of high overheads. Typically the rents at Post Tysons Corner are twenty percent higher than comparable condos in the Tysons Corner area.

Avalon Crescent – This higher end community in Tysons is located in between Lillian Court and the Fountains at Mclean. Similarly to Post Tysons Corner, the condos here have much higher rents when compared to the most communities in Tysons. Amenities are plenty and the management is great, however, all of that comes at a much higher price tag.

For more information and current for sale and rental listings for the above communities please visit: http://tysons-corner-va.nvacondos.com/

Top Five Home Renovations Before Selling Tips

If you’ve done your homework and found that property makeovers are a financially sound decision to make before selling, there are a number of aspects you should keep in mind before you let a contractor begin swinging his sledge hammer.

Particularly, choosing to complete home renovations before promoting may be decidedly different than if you were making the house renovations for your own satisfaction. We have therefore put together a list of the top five things to consider when dealing with property restorations prior to selling:

Get more than one estimate

Within the rush to get the work completed and the house on the market, many sellers fly through the procedure for choosing a contractor to accomplish the work. However, not taking the time to find the right licensed contractor can mean disaster, both for the renovations and the following effect it can have on your ability to sell your property.

In short, get at least three estimates from three contractors who come with sparkling references. Also, don’t forgo calling references provided to you, and ask important questions, such as: Did they complete the work on time? Was the job completed to your full satisfaction? Did they accomplish the work on spending budget? Would you use them once again for a property restoration project?

Check and double-check the actual deadline with the service provider

Unless the contractor can definitively complete the actual project within your time frame, choose another expert, as deadlines for people selling their property are more important than ever. Make sure you reiterate the significance of finishing the job on time, and make sure the contractor incorporates this deadline within the contract.

Get just about all applicable permits

Don’t skimp on the details with your property renovations before selling, as the buyer may very well ask to see the permits. Display for the buyer that you required all necessary steps to ensure that the job had been completed professionally and safely by getting all appropriate permits.

Stay neutral

When selecting finishes for your home renovations, think neutral. In other words, you may enjoy red tile in the bathroom, but the truth is that most buyers will not. Think in terms of a wide audience, and stay as neutral as possible as to appeal to the majority of potential buyers.

Think mid-range for many projects

In order to ensure that you stay within budget and that you realize a return on your investment, think mid-range in terms of materials and finishes, (the only time this particular rule may not apply is in very expensive houses or mansions). Although many buyers would appreciate stainless appliances in the kitchen, the very fact of the matter is that you may not see a return on this investment. Choosing good-quality, sleek black appliances, on the other hand, will still show well in your renovated kitchen, however will cost you about a third of stainless steel home appliances.

Of course, before starting upon any house renovations before promoting, consult a real estate agent to make sure you will be able to see a return on your investment whenever selling.