IRS to Provide Tax Relief to Flood Victims

IRS Provides Tax Relief to South Carolina Flood Victims; Oct. 15 Tax Deadline Extended to Feb. 16

WASHINGTON ––South Carolina flood victims, including individuals and businesses that previously received a tax-filing extension to Oct. 15, will have until Feb. 16, 2016, to file their returns and pay any taxes due, the Internal Revenue Service announced today. All workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization also qualify for relief.
Following this week’s disaster declaration for individual assistance issued by the Federal Emergency Management Agency (FEMA), the IRS said that affected taxpayers in Berkeley, Charleston, Clarendon, Dorchester, Georgetown, Horry, Lexington, Orangeburg, Richland, Sumter and Williamsburg Counties will receive this and other special tax relief. Other locations may be added in coming days, based on damage assessments by FEMA.
The tax relief postpones various tax filing and payment deadlines that occurred starting on Oct. 1, 2015. As a result, affected individuals and businesses will have until Feb. 16, 2016, to file these returns and pay any taxes due. Besides the Oct. 15 extension deadline, this also includes the Jan. 15, 2016, deadline for making quarterly estimated tax payments. A variety of business tax deadlines are also affected including the Nov. 2, 2015, and Feb. 1, 2016, deadlines for quarterly payroll and excise tax returns.
The IRS will abate any interest, late-payment or late-filing penalty that would otherwise apply. The agency automatically provides this relief to any taxpayer with an IRS address of record located in the disaster area. Taxpayers need not contact the IRS to get this relief.

Beyond Designated Disaster Areas
The IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227.
Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either last year’s or this year’s return. Claiming these casualty loss deductions on either an original or amended 2014 return will get the taxpayer an earlier refund but waiting to claim them on a 2015 return could result in greater tax savings depending upon other income factors.
In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due on or after Oct. 1 and before Oct. 16 if the deposits are made by Oct. 16, 2015. Details on available relief can be found on the disaster relief page on IRS.gov.
The tax relief is part of a coordinated federal response to the damage caused by severe storms and flooding and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.
Disaster victims in other parts of the country also qualify for tax relief, based on federal disaster declarations issued earlier this year. Currently, individuals and businesses in parts of California, Kentucky, Texas and the Northern Mariana Islands may qualify for filing and payment relief. See the IRS Disaster Relief page for details.

Thank you to the IRS Newswire for sending this information and providing the details in issue number IR-2015-112.

ROAR: South Carolina's tax code is interfering with job creation

On Tuesday, economists from states all across the country gathered at Coastal Carolina University in Conway to discuss the effects of South Carolina's archaic and counterproductive tax code at their annual economic growth summit. "Unemployed workers can add the South Carolina tax code to the list of reasons that they cannot find work..." begins the August 9 article by Adva Saldinger in the Myrtle Beach Sun News.

Read the article in the Sun News by clicking here.

Saldinger reports that, according to the economists, South Carolina's tax system is actually preventing new business creation and company expansion. In fact, the tax code is preventing job creation across the South Carolina. Economists pointed to the numerous special tax exemptions on the books and the need for comprehensive tax reform. According to ROAR, a group advocating for comprehensive tax reform, South Carolina exempts more sales tax than it collects.

Dr. Russell Sobel, an economics professor at West Virginia University, said, "When the government gives out too much stuff there's too many people at the table." Dr. Rob Salvino, Coastal Carolina, further argued that many companies either leave or never come to South Carolina "because they are not at the level to manipulate that process."

According to ROAR, our state is not broke, our tax system is.

You can read more about ROAR's take on our state's tax system by clicking here.

ROAR's Dr. Michael W. Fanning has spoken recently in Greenville.

U.S. Senate Votes to Repeal New 1099 Requirement

The U.S. Senate passed HR 4, the bill to fully repeal the expanded 1099 reporting contained in last year's health care law.

While the repeal is not finished until the President signs this bill into law, the effort could not have gotten this far without the involvement of Home Builders around the country. In addition to Home Builders, hundreds of associations around the country, all representing small businesses just like Home Builders, weighed in to tell Congress with one voice that repealing the new 1099 requirement was a top priority and one of the most important issues all small businesses will face in the coming year.

If allowed to stand, the new 1099 requirement will take effect on January 1 and require all businesses to obtain W9 forms, and issue 1099 forms, to every person and business with whom they do business, regardless of the amount transacted. Experts estimate that the average business will need one full-time employee just to comply with the requirement.

HR 4 now heads to the President's desk for his consideration.

Mortgage Interest Deduction Primarily Benefits Middle Class

According to a study just completed by NAHB, the benefits of the mortgage interest and real estate tax deductions are collected primarily by the middle class.

The deductions for mortgage interest and real estate taxes are important and long-established tax provisions that benefit homeowners and stakeholders in the housing sector. As a result of recent proposal to increase taxes to address the long-term federal budget structural deficit, these deductions have been called into question.

The data and estimates in the study demonstrate that the benefits of these deductions are collected primarily by middle-class taxpayers, with incomes between $50,000 and $200,000. Moreover, greater benefits are earned by larger households and families, such as those with children. The data also show that as a share of household income, larger benefits are collected by families with less than $200,000 income, meaning that these tax rules make the tax system more progressive.

Read the entire report at NAHB.org by clicking here.

REMINDER (Builders): Property Tax Relief Deadline is Near

As the result of a law passed in 2009 with the help of the Home Builders Association of South Carolina, Home Builders are eligible for property tax relief on homes they have completed but are not yet sold or occupied. The relief is available for up to five years, but is lost once the home is occupied (for example, if the home is rented) or sold.

January 31, 2011 is a VERY IMPORTANT date. The property tax exemption deadline for recertifying unoccupied homes that got property tax relief in 2010, and for certifying any newly constructed homes, or older homes that have not been enrolled in the program for the 2010 property tax year, is January 31. Those who fail to certify or recertify with their county assessor by January 31 will have no recourse and there will be no exceptions and no tax relief. If you think you might be eligible, contact your county assessor. When in doubt, call your assessor. There are significant savings to be had by participating in this property tax relief program.

Relief also is available for the part of the year in which the home is completed. However, you must apply for relief within 30 days of receiving a certificate of occupancy.

DETAILS OF LAW:

1. Effective date: July 1, 2009
2. Homes Covered by Law: Newly constructed unoccupied detached single-family homes built in 2007 or later.
3. Extent of Tax Relief: Provides property tax relief only for real estate improvement (new home), but builder/developer still pays property tax on the unimproved land.
4. First Eligible Tax Year: 2009 property tax year. No refunds are available for the 2007 and 2008 tax years. Exemption application must have been made by September 30, 2009, to be eligible for relief in the 2009 tax year.
5. Duration of Eligibility: Until the house is sold, occupied, or it has reached the property tax year ending the sixth December 31(five years) from the date a Certificate of Occupancy (CO), if required, was issued, whichever comes first.
6. Recertification: After the initial application, the builder will be required to re-certify homes with Certificate of Occupancy (CO) annually by January 31 every eligible year that the house remains unoccupied.
7. Homes with No CO: Homes without a certificate of occupancy (if required) are not habitable, therefore they can’t be occupied. This means that they can’t be added to the tax rolls until both the CO is issued (if required) and the house is occupied (Administrative Law Court decision).
8. Change in Occupancy: Builders are required to notify the assessor if the house is rented or is occupied by the builder. The house permanently loses its tax exemption with the notification. If the house is sold, the assessor will pick up the change in tax status when property deed is recorded.
9. Legal Reference: Section 12-37-220(B) of state code of law. Bill – H. 3018, Ratification- R88, Act- 76
10. Obtaining Exemption: Homes Receiving CO in 2009 or later, notify assessor within 30 days of receiving a CO, or by January 31, that the house is unoccupied.

If house sale is not pending, it would seem prudent to file the exemption form when the CO is issued just to be safe. Each county has a form to claim the exemption. However, the form may vary slightly from county to county. To protect your legal rights, the application must be notarized.

NAHB Study Demonstrates Value of Housing Tax Incentives

A new study by the National Association of Home Builders demonstrates that households across the economic spectrum benefit from housing tax incentives. This research counters the often-heard but erroneous claim that the mortgage interest deduction almost exclusively benefits high-income households.

The study, which was authored by NAHB tax economist Robert Dietz, Ph.D., supplements previous NAHB research regarding housing tax incentives, explores the problems with government methods of measuring the size of housing tax expenditures, and re-examines the income distribution of the mortgage interest and real estate tax deductions.

A multitude of descriptive statistics in the report demonstrate that the housing-related tax deductions, the mortgage interest and real estate tax deductions, strongly benefit not just average home buyers but also younger households who tend to be recent home buyers with larger mortgage debt. This is true in terms of aggregate amounts claimed on tax forms, average deduction amounts, and shares of taxpayer income.

The paper's conclusions suggest that proposals to change these deductions need to take into account the generational consequences, particularly with respect to first-time home buyers, as well as the impacts on modest-income households.

You can access the study for free by clicking here.

NAHB's Top 10 Actions To Benefit Members in May

These are the Top 10 Actions taken by NAHB to benefit members in May:

1. Credit Crisis: NAHB worked with members of Congress to draft the Residential Construction Lending Act. The bill is pending.
2. Cash for Caulkers: NAHB has taken steps to ensure that members will be tapped to participate in the work resulting from legislation that will offer tax-free rebates for residential energy-efficiency improvements. The bill is pending. www.nahb.org/energyefficiencyretrofits
3. Financial Regulatory Overhaul: NAHB was actively involved in passing the financial regulatory overhaul bill, Restoring American Financial Stability Act. The bill has passed Congress.
4. Green Multiple Listing Service Toolkit: NAHB developed a toolkit to help real estate appraisers provide more reliable valuations of homes with energy-efficient features. www.greenthemls.org
5. Study demonstrates benefits of housing tax incentives: NAHB's Economics and Housing Policy Group recently completed a study that demonstrates that households across the economic spectrum benefit from housing tax incentives.
6. Technical Assistance Hotline: NAHB has implemented a hotline where HBA members can find out about building products, techniques, technologies, and best practices. www.nahbrc/techassist
7. Construction Forecast Conference: NAHB's semi-annual Construction Forecast Conference is held in the Spring and the Fall, and is now available via webcast.
8. Homebuyer Tax Credit: The credit expired on April 30. NAHB has developed a useful brochure called "Opportunity Knocks" that outlines why now is a great time to buy a new home. www.nahb.org/homebuyerbrochure
9. OSHA Workplace Safety Agreement: NAHB and OSHA renewed a formal agreement to work together to provide home builders with information, guidance, and access to training to protect your workers on the job site. www.osha.gov/dcsp/alliances/hang.nahb.html
10. Webinar on Using Social Media: The NAHB Professional Women in Building Council hosted a webinar to teach builders how to use social media to build their brand and sell more homes.

HBA of Greenville members benefit from a three-in-one membership. As an HBA member, a portion of your dues are sent to NAHB and your receive membership benefits like those above from the National Association of Home Builders.

NAHB Offers Brochure for Consumers

Now that the home buyer tax credit program has expired, it is important to emphasize to today's homeuyers all of the great reasons why now is a great time to buy a new home.

With this in mind, NAHB's popular virtual brochure for consumers "Opportunity Knocks" has been updated and is ready for home builders to download and use.

The brochure highlights the federal tax benefits of owning a home, the difference that even a small increase in interest rates can make on a monthly mortgage payment, and the solid value of homeownership over the long-term. It's available as a PDF file that NAHB members can download for free at www.nahb.org/homebuyerbrochure.

HBA members are encouraged to post this resource to your websites, and to print it for distribution in your sales offices.

Home Buyer Tax Credit Extension Approved by U.S. Senate

The U.S. Senate gave approval to extending the closing deadline for the Homebuyer Tax Credit yesterday. The House previously approved the same measure and it awaits President Obama's signature.

The measure, contained in the Homeubuyer Assistance and Improvement Act (H.R.5623), extends the deadline to close and receive the tax credit to September 30, 2010, for homes under contract on or before April 30, 2010. The effect of the measure is to extend the deadline for closing transactions eligible for the tax credit to September 30 from July 30.

For home builders and lenders the legislation provides three additional months to complete construction and paperwork for home buyers to close on the home and receive the tax credit.

NAHB, the National Association of Realtors, and other associations worked closely with Congress to extend the deadline.

REMINDER: Property Tax Relief Deadline Nears

Last year the HBA passed a bill (H.3018) that would allow builders with completed, but unoccupied, new homes to avoid paying property tax for up to five years on the real estate improvement (house) until the house is sold/occupied, or remains on the market for five years. During the time the house is unoccupied, services provided by the local government are minimal. This piece of legislation proved to be a business saver for many home builders in 2009.

January 31, 2010 is a VERY IMPORTANT date. The property tax exemption deadline for re-certifying unoccupied homes that got property tax relief in 2009, and for any newly constructed homes, or older homes that have not been enrolled in the program for the 2010 property tax year, is January 31. Those who fail to re-certified or signed up with their county assessor by January 31 will have no recourse and there will be no exceptions and no tax relief. If you think you might be eligible, contact your county assessor. When in doubt, call your assessor. There are significant savings to be had by participating in this property tax relief program.


DETAILS OF LAW:
1. Effective date: July 1, 2009

2. Homes Covered by Law: Newly constructed unoccupied detached single-family homes built in 2007 or later.

3. Extent of Tax Relief: Provides property tax relief only for real estate improvement (new home), but builder/developer still pays property tax on the unimproved land.

4. First Eligible Tax Year: 2009 property tax year. No refunds will be available for the 2007 and 2008 tax years. Exemption application must be in by September 30, 2009

5. Duration of Eligibility: Until the house is sold, occupied, or it has reached the property tax year ending the sixth December 31(five years) from the date Certificate of Occupancy (CO), if required, was issued, whichever comes first.

6. Recertification: After the initial application, the builder will be required to re-certify homes with Certificate of Occupancy (CO) annually by January 31 every eligible year that the house remains unoccupied.

7. Homes with No CO: Homes without a certificate of occupancy (if required) are not habitable, therefore they can’t be occupied. This means that they can’t be added to the tax rolls until both the CO is issued (if required) and the house is occupied (ALJ Judge Decision).

8. Change in Occupancy: Builders are required to notify the assessor, if the house is rented or is occupied by the builder. The house permanently loses its tax exemption with the notification. If the house is sold, the assessor will pick up the change in tax status when property deed is recorded.

9. Legal Reference: Section 12-37-220(B) of state code of law. Bill – H. 3018, Ratification- R88, Act- 76

10. Obtaining Exemption: Homes Receiving CO in 2007- 2008 – Builder should file exemption form with county assessor by January 31, 2010 for 2010 tax year exemption. Homes Receiving CO in 2009 or later, notify assessor within 30 days of receiving a CO, or by January 31, that the house is unoccupied.


If house sale is not pending, it would seem prudent to file the exemption form when the CO is issued just to be safe. Each county has a form to claim the exemption. However, the form may vary slightly from county to county. To protect your legal rights the application must be notarized.

UPDATE: Tax Credit Extension Signed by the President

On Friday President Obama signed into law the extension of the Home Buyer Tax Credit extension. The act includes expanding the tax credit to homes bought by certain existing homeowners who are moving up. It also includes a new Net Operating Loss Carryback Provision that will benefit home builders who have recently had operating losses in the businesses.

Below are details of the new tax credit, which is effective immediately. More on the Net Operating Loss Carryback Provision will be posted soon.

Who is Eligible

First-time home buyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for a tax credit of 10% of the home purchase price, up to a maximum of $8,000.

Existing home owners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for a tax credit of 10% of the home purchase price, up to a maximum of $6,500.

All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits

Home buyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.

For married couples filing a joint return, the combined income limit is $225,000.

Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.

The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates

The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify

All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable

A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

For example:
o A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 tax credit).
o A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 tax credit).

All qualified home buyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions

The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

What Your HBA Has Been Doing For You Lately

To: Members of the Home Builders Association of Greenville

From: Michael Dey, Executive Vice President

I want to share with you some information about a couple of important meetings that have taken place in recent weeks that bear directly on how the Federal government has intervened in the housing industry.

Meeting with Congressman Bob Inglis

At the request of NAHB, several home builders met with Congressman Bob Inglis and his staff about the challenges being faced by home builders in the new economy. Hal Dillard (2004 HBA President and NAHB Congressional Ambassador to Congressman Inglis), President Bruce Pasquarella, President's Appointee Coleman Shouse (2006 HBA President), Legislative Chairman Rick Quinn, and I sat down with Congressman Inglis and Wayne Roper, his chief of staff, here in Greenville to talk with him about the need for the Federal government to take the following actions:

• Extend the $8,000 home buyer tax credit until December 1, 2010, and expand eligibility to all home buyers

• Urge federal banking regulators to improve acquisition, development and construction (AD&C) credit conditions

• Urge federal housing regulators to correct the flawed home appraisal process

• Co-sponsor net operating loss (NOL) relief bills: H.R. 2452 in the House and S. 823 in the Senate

We discussed with the Congressman the challenges our members have been having in tackling their credit relationships with their banks as well as the problems many of our members have had in obtaining credit for bona fide projects. We also were thorough in telling the Congressman that our banking members are equally challenged with the constraints of new regulatory oversight and the problems it has created for them in meeting the credit demands of the home building industry.

Congressman Inglis was very attentive to our needs and concerns, although it should be no secret that he is not a fan of stimulus efforts like the tax credit.

Nonetheless, the Congressman took our concerns very seriously and extended an invitation to me to return to his office the following day for a second meeting.

Meeting with Congressman Inglis and the Head of the Charlotte Office of the Federal Reserve Bank of Richmond

I returned to the Congressman's office the next day for a meeting with the Congressman and Matthew Martin, Senior Vice President and Charlotte Regional Executive for the Federal Reserve Bank of Richmond.

We discussed the challenges that Home Builders have had with the changing credit standards and the impact it has had on the industry and the real estate market, including home prices, as well as the industry's inability to meet housing demand, particularly at lower price points. While I do not think the meeting was fruitful in influencing the actions of the Fed, it was fruitful in educating Congressman Inglis about your challenges and the need to tackle over-burdensome regulatory standards and the need to extend the homeownership tax credit.

While we were meeting with Congressman Inglis, there were other meetings occurring around the state with other members of Congress. The meeting with Congressman Spratt was crucial because of the Congressman's position in the U.S. House of Representatives as Chairman of the Budget Committee, a key place in the House leadership.

Now that Congress is back in session, the efforts have shifted to Washington, but the need for our continued efforts to influence Congress on the tax credit and other issues remains important. If YOU have not called or written to Congressman Inglis, you should and you can by clicking on this link: http://www.capitolconnect.com/builderlink/

Property Tax Relief for Home Builders

Our efforts are not isolated to Congress. In June I wrote to you to tell you about the property tax relief your association successfully secured for you for spec houses that have never been occupied. Attached is a briefing paper on that topic from the S.C. Department of Revenue.

An important deadline is coming up that you may need to act upon. If you retain in inventory a spec or specs that were built in 2007 or 2008, that have NEVER been occupied, you can receive relief from the property taxes on the improvements (the house itself, the lot will still be taxed). But you need to apply for that relief by September 30.

Your association also has planned a Lunch and Learn so you can hear about all of the details from the official charged with granting the relief, Debbie Adkins, Greenville County Tax Assessor. Here are the details:

• Lunch and Learn: Tax Exemption for Home Builders

• Speaker: Debbie Adkins, Greenville County Tax Assessor

• Monday, September 21, 11:30 a.m., Hubbell Lighting

• Please RSVP by emailing info@hbaofgreenville.com

Sometimes in the most challenging of times, you might question the value of your membership. Actions like the ones above go on daily in the good times and the not so good times and they take time, energy, and money. Our Officers, Directors, Councils and Committees keep doing what is necessary to serve and protect this industry and I ask that you think about that as we work through these challenging times together. This is why we also ask you to think of our members first when you are in need of any services or products related to this industry. Members pay their dues which allow us to do what is necessary to watch all of our backs and it is only fair that we give them a chance to earn a living. Please do business with members of the Home Builders Association of Greenville. Find out who your fellow members are by clicking on this link: http://www.hbaofgreenville.com/findamember.jsp