Newport Beach, Costa Mesa and Orange County homeowners and real estate professionals may be interested in the below “Homeowner Legislative Facts,” re-published with permission from the California Association of REALTORS®:
The Legislature has passed AB 1393 (Perea), a bill that will prevent homeowners from being charged state income tax when they’ve had a mortgage loan modified to reduce the principal. Under current law, the forgiven debt created by a reduction in principal as a result of a loan modification isn’t subject to federal income tax, but is currently taxable under state law. The bill has been passed by the state Legislature and awaits the Governor’s signature. If signed, it will become effective immediately and is retroactive to January 1, 2014. This is great news for homeowners. The CALIFORNIA ASSOCIATION OF REALTORS® supports this measure.
How Citigroup Settlement Affects Borrowers – updated 7/17/14Citigroup settlement to provide money for consumer relief.
Citigroup has recently reached a $7 billion settlement with the U.S. Department of Justice for its role in the mortgage market meltdown. Of that, over $2.5 billion is set aside nationwide for consumer relief. Here’s some great information in the San Jose Mercury News about how the settlement affects California homeowners who had loans underwritten or serviced by Citi and what to do if you may be eligible to file a claim.
Coastal Commission Suit May Set Precedent Affecting Property Rights – updated July 7/17/2014Lawsuit affecting property rights to be considered by Court of Appeals.
A lawsuit involving the California Coastal Commission, which regulates property in the coastal zone, is scheduled to be heard soon by a San Diego Appeals court. Because the decision will be made by an Appeals court, it may eventually affect property owners up and down the coast. Two homeowners in Encinitas had applied to the Coastal Commission for a permit to rebuild a sea wall damaged in a storm. In order to receive the permit, the Coastal Commission required that the permit application be re-submitted in twenty years. If the permit was then rejected, the homeowners would have to then take down the sea wall. The property owners filed suit to nullify that requirement. A local judge deciding the initial case referred to the Coastal Commission’s requirement as a “power grab.” Learn more about the case in the Los Angeles Times.
Pro-Consumer, Anti-“Shill Bidding” Bill Considered in Senate – updated 6/20/14
Legislature Reviews Bill to Allow Seniors and Disabled to Postpone Property Tax– updated 6/20/14
Bill Introduced to Prevent Homeowner Associations from Imposing Unnecessary Document Fees – updated 6/20/14
Legislature Considers Bills to Prevent Fines for Underwatering Landscaping – updated 6/20/14
Homeowner Tax Proposal Abandoned – updated 6/1/14
IRS Further Clarifies Stance on Forgiven Debt in a Short Sale – updated 6/1/14
Mortgages to Remain More Affordable – updated 6/1/14
Legislature Proposes Limits on Going out of Business – updated 6/1/14
Legislature Considers Tax on Homeowners – updated 3/25/14
SB 391 is in the Assembly Appropriations Committee. The CALIFORNIA ASSOCIATION OF REALTORS® is opposing this bill.
Draft Tax Plan Would Limit Homeowners Tax Deductions — updated 3/25/14Rep. Dave Camp, Chair of the House Ways and Means Committee of the U.S. House of Representatives, recently unveiled a large-scale plan to overhaul the federal tax code. Included in his draft proposal was a significant limit on the mortgage interest deduction. Over four years, the amount of mortgage principal on which interest is deductible would be reduced from the current $1,000,000 to $500,000. According to the National Association of REALTORS®, this would apply only to new loans. In many areas of California, homeowners who would have struggled to purchase even the median priced home would be unable to take the full deduction for their mortgage interest and therefore might be priced out of the market. The draft plan also calls for the elimination of the deduction for property taxes.
The plan is currently in draft form, meaning that no bill has yet been introduced in the House of Representatives.
President Obama signs Flood Insurance Bill into law — updated 3/25/14
On March 21, 2014, President Obama signed the “Homeowner Flood Insurance Affordability Act” into law. This law repeals FEMA’s authority to increase premium rates at time of sale or new flood map, and refunds the excessive premium to those who bought a property before FEMA warned them of the rate increase. The bill limits premium increases to 18 percent annually on newer properties and 25 percent for some older ones. Additionally, the bill adds a small assessment on policies until everyone is paying full cost for flood insurance.
Homeowners with questions about flood insurance should contact their insurance agent.
Short Sellers Won’t Be Taxed on Forgiven Debt — updated 3/25/14
In a short sale, homeowners sell their homes for less than what is owed. If a lender agrees to the sale, the lender is forgiving a certain amount of the loan principle. The IRS and the state Franchise Tax Board have recently issued letters clarifying that California families who have lost their home in a short sale are not subject to either state or federal income tax on the forgiven debt. Before these clarifications, requested by Senator Barbara Boxer and Board of Equalization Member George Runner on behalf of the CALIFORNIA ASSOCIATION OF REALTORS®, it was not entirely clear that homeowners wouldn’t lose their homes and then be faced with a large tax bill as well. Homeowners with questions about taxes and short sales should contact their tax professionals.
Law Requiring Water-Conserving Plumbing Fixtures Goes into Effect — updated 3/25/14
A law calling for the replacement of older plumbing fixtures with water-conserving ones went into effect on this year. The law says that, as of January 1, 2014, when improving a property new water-conserving toilets, showerheads, faucets and urinals must be installed before the local building department will issue a certificate of final completion and occupancy. The plumbing fixtures that will need to be replaced are: any toilet manufactured to use more than 1.6 gallons per flush; any showerhead manufactured to have a flow capacity of more than 2.5 gallons of water per minute; any interior faucet that emits more than 2.2 gallons of water per minute and any urinal manufactured to use more than one gallon of water per flush. Homeowners with questions about their individual fixtures are urged to contact the manufacturers.
Devin R. Lucas is a Real Estate Attorney, Broker and REALTOR®, specializing in Newport Beach, Costa Mesa and Orange County, serving individual, investor and small business interests in real estate. Active with the Newport Beach Association of REALTORS® and Costa Mesa Chamber of Commerce, Devin R. Lucas Real Estate is an independent real estate brokerage and law practice located in Newport Beach, California.
2901 West Coast Highway Suite 200
Newport Beach | California | 92663-4023