Relief for Taxpayers Affected by Ongoing Coronavirus Disease

presidential seal

I. PURPOSE

On March 13, 2020, the President of the United States issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic (Emergency Declaration). The Emergency Declaration instructed the Secretary of the Treasury “to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency, as appropriate, pursuant to 26 U.S.C. 7508A(a).” Pursuant to the Emergency Declaration, this notice provides relief under section 7508A(a) of the Internal Revenue Code for the persons described in section III of this notice that the Secretary of the Treasury has determined to be affected by the COVID19 emergency.

II. BACKGROUND

Section 7508A provides the Secretary of the Treasury or his delegate (Secretary) with authority to postpone the time for performing certain acts under the internal revenue laws for a taxpayer determined by the Secretary to be affected by a Federally declared disaster as defined in section 165(i)(5)(A). Pursuant to section 7508A(a), a period of up to one year may be disregarded in determining whether the performance of certain acts is timely under the internal revenue laws.

III. GRANT OF RELIEF

The Secretary has determined that any person with a Federal income tax payment due April 15, 2020, is affected by the COVID-19 emergency for purposes of the relief described in this section III (Affected Taxpayer). For an Affected Taxpayer, the due date for making Federal income tax payments due April 15, 2020, in an aggregate amount up to the Applicable Postponed Payment Amount, is postponed to July 15, 2020. The Applicable Postponed Payment Amount is up to $10,000,000 for each consolidated group (as defined in §1.1502-1) or for each C corporation that does not join in filing a consolidated return. For all other Affected Taxpayers, the Applicable Postponed Payment Amount is up to $1,000,000 regardless of filing status. For example, the Applicable Postponed Payment Amount is the same for a single individual and for married individuals filing a joint return. In both instances the Applicable Postponed Payment Amount is up to $1,000,000.

The relief provided in this section III is available solely with respect to Federal income tax payments (including payments of tax on self-employment income) due on April 15, 2020, in respect of an Affected Taxpayer’s 2019 taxable year, and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 taxable year. The Applicable Postponed Payment Amounts described in this section III include, in the aggregate, all payments described in the preceding sentence due on April 15, 2020 for such Affected Taxpayers.

No extension is provided in this notice for the payment or deposit of any other type of Federal tax, or for the filing of any tax return or information return.

As a result of the postponement of the due date for making Federal income tax payments up to the Applicable Postponed Payment Amount from April 15, 2020, to July 15, 2020, the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to pay the Federal income taxes postponed by this notice. Interest, penalties, and additions to tax with respect to such postponed Federal income tax payments will begin to accrue on July 16, 2020. In addition, interest, penalties and additions to tax will accrue, without any suspension or deferral, on the amount of any Federal income tax payments in excess of the Applicable Postponed Payment Amount due but not paid by an Affected Taxpayer on April 15, 2020.

Affected Taxpayers subject to penalties or additions to tax despite the relief granted by this section III may seek reasonable cause relief under section 6651 for a failure to pay tax or seek a waiver to a penalty under section 6654 for a failure by an individual or certain trusts and estates to pay estimated income tax, as applicable. Similar relief with respect to estimated tax payments is not available for corporate taxpayers or tax-exempt organizations under section 6655.

IV. DRAFTING INFORMATION

The principal author of this notice is Jennifer Auchterlonie of the Office of Associate Chief Counsel, Procedure and Administration. For further information regarding this notice, you may call (202) 317-3400 (not a toll-free call).

What responsibilities does a tenant have?

Tenants and Landlords

The tenant’s duty to maintain

If the leased premises is in need of repair, whether minor or major, the tenant needs to notify the landlord of the condition. The notification may be made orally, or in writing.

After advising the landlord of the need for repairs, the tenant may make the repairs and deduct the cost of the repairs from the next month’s rent if:

  • the landlord fails to make the necessary repairs within a reasonable time after notice of the defect; and
  • the cost of repairs does not exceed the amount of one month’s rent, called the repair and deduct remedy.

The repair and deduct remedy may not be used more than twice in any 12-month period. [CC §1942(a)]

However, the repair-and-deduct remedy is not available to the tenant when the need for repair is created by the tenant’s conduct. [CC §1942(c)]

Over the course of the tenancy, normal wear and tear is expected to occur. Thus, the landlord may not charge the tenant for any minor defects due to normal wear and tear that are discovered in the pre-expiration inspection.

However, the tenant breaches their duty to care for and maintain the premises when the tenant:

  • contributes substantially to the dilapidation of the premises; or
  • substantially interferes with the landlord’s duty to maintain the premises. [CC §1941.2(a)]

For example, a tenant does not notify their landlord of a leak in the roof that is causing damage to the ceiling of the rental unit. Eventually, the ceiling falls down, causing damage to the tenant’s personal property, the walls and the floor coverings. Here, the tenant interfered with the landlord’s duty to maintain the property since the tenant failed to:

  • notify the landlord of the leak in the roof; or
  • repair the leak.

Therefore, the tenant is liable to the landlord for the cost of repairing the damaged ceiling since they neglected to report the water seepage.

A reasonable time for the landlord to make necessary repairs after notice is 30 days, unless the need to repair is urgent and requires more immediate attention. [CC §1942(b)]

The landlord’s duty to maintain

A residential landlord has a general obligation to:

  • put a residential unit in a condition fit for occupancy prior to leasing; and
  • repair all unsafe and unsanitary conditions that occur during occupancy that would render the unit uninhabitable.

Further, all residential rental and lease agreements automatically contain an implied warranty of habitability. The unwritten warranty imposes a contractual duty on a landlord to keep their residential units fit for human occupancy at all times. [Green v. Superior Court of the City and County of San Francisco (1974) 10 C3d 616]

The landlord’s statutory obligation to maintain their residential units requires the landlord to correct major defects interfering with the tenant’s ability to live on the property, such as a lack of hot water or a leaky roof.

The residential landlord has an obligation to care for and maintain all major and structural components of residential rental units. They are also further obligated to repair minor defects. Minor defects include such conditions as:

  • leaky faucets;
  • faulty electrical switches; and
  • failed locks or latches.

Typically, a residential landlord agrees in the rental or lease agreement to care for and maintain the property, which includes the repair of minor defects. [See RPI Form 550]

The landlord’s failure to repair or replace minor defects constitutes a breach of provisions in the rental or lease agreement. The landlord who breaches the lease agreement by failing to make minor repairs is required to reimburse the tenant for reasonable costs incurred by the tenant to cure the defects.

So that both tenant and landlord are on the same page about the unit’s condition upon move-in, they need to complete a Condition of Premises Addendum. [See RPI Form 560]

When the unit is furnished, the landlord and tenant also need to complete a Condition of Furnishings Addendum. [See RPI Form 561]

Before the tenant vacates, the landlord needs to conduct a pre-expiration inspection. If the landlord finds any damage sustained to the unit, fixtures or furnishings, they will record these on a statement of deficiencies. The cost to repair any defects not corrected before the tenant moves out will be deducted from their security deposit. Further, the landlord may demand payment for any damages exceeding the security deposit. [Calif. Civil Code §1950.5(b)]

Provided by ft Editorial Staff

NV East Shore Real Estate Update

REAL ESTATE UPDATE LAKE TAHOE

There were 9 residential home sales on the Nevada East Shore in February as compared to 13 last year. The median sales price hovered around $890,000 – same as last year. The days on market however declined from 201 days in 2019 to 145 in 2020. Five of the sales occurred along the Kingsbury Grade area with 2 at Round Hill, and 1 each at Zephyr Heights and Skyland. There were an additional 5 condo/townhome sales as compared to 6 last year. Nothing changes if nothing changes, they say however if you decide to sell your residence and are looking for an experienced local agent with 25 years of experience, I’d be happy to help. Robert Stiles, REALTOR® NV BS.1001136 CHASE INTERNATIONAL 530-314-0352 / 775-309-8454

Understanding “CAP Rates”

Net Operating Income

In commercial real estate, the capitalization rate or “cap rate” is a formula utilized to analyze real estate markets and compare investment opportunities. A property’s capitalization rate can be calculated by dividing its net operating income by its purchase price. The cap rate provides a snapshot of a property’s earning potential. Both investors and business owners utilize cap rates when shopping for commercial real estate, as a higher cap rate means a higher return for the investor.

Cap Rate 
Net Operating Income /Purchase Price = Cap Rate

In the example below, an investor purchases a doctor’s office for $500,000. The property has a long-term tenant, with a 10-year NNN lease. The monthly rental income is $2,500, with an annual net income of $30,000. In this scenario, the property’s cap rate is 6%. In addition to providing a measuring stick to compare similar properties against, cap rates provide investors with an expected rate of return. In this scenario, the 6% cap rate means the investor received a 6% annual return on their capital (in addition to any appreciation).

6%        =  $30,000 / $500,000

A property’s cap rate offers a very practical way to analyze its value, by comparing its earning potential and purchase price. Like a weather barometer, cap rates can be used to measure the economic health and investment activity within a community. Currently, national cap rates for commercial properties range from 4% to 10%, with Reno’s cap rates ranging from 5-7%.

In today’s low interest rate environment, with money markets paying less than 2%, local commercial real estate continues to offer investors 5-7% annual yields. Known for being a stable asset class that preserves wealth, commercial properties remain an attractive investment for individuals, businesses, retirement plans, and trust funds.

My Home Appraisal Came in Low

Appraisal Came in Low

Your appraisal came in lower than your accepted offer price. The first thing your agent should do is review the appraiser’s report for errors.  Appraisal challenges are not easy but what if your challenge fails?  There are essentially four options.

  • Ask for a new appraisal. You can ask the lender to order an appraisal from a different company. This could certainly be met with resistance and the lender could flat out just say no.
  • While not the best option for the seller, the price could be reduced to the appraised value and the sale could move forward.
  • The buyer could increase the amount of money they put down. If the seller is digging in their heals and won’t budge the buyer could increase their down payment to make up the difference in the appraised value.
  • The fourth option is actually a combination of the last two options. This is an option that I have personally seen work on a few occasions. Like anything else in life the buyer and seller compromise with the seller reducing the price and the buyer coming up with an additional amount of funds. In this scenario both parties contribute and the sale goes on as planned!”

Remember appraisal’s are not the ultimate judgment of a home’s value. A home’s true value is what a “qualified” buyer will pay for it.

Lake Village

Lake Village

Lake Village is a planned unit development of 330 townhouses spread out over 52 acres of forestland at Stateline, Nevada. It was designed and built in the early 1970s with homes ranging from 1 bedroom, 2 bath up to 4 bedroom, 3½ bath.  Two and three bedroom units are the most common. Some even have private outdoor hot tubs.

Both residents and guests have access to the seasonal, heated outdoor swimming pool. There are also four tennis/pickleball courts, a basketball hoop, and a year-round outdoor hot tub. Dry saunas, and a picnic area with propane barbecues are available, as well as nearby hiking and bike trails.

Nevada Beach is an approximate 15-minute walk through the meadow across Highway 50.  Stagecoach and Boulder Lodges at Heavenly are only a seven-mile drive up Kingsbury Grade. These advantages make Lake Village a popular destination in both summer and winter.

All the townhouses are privately owned. Some of Lake Village’s owners live here year round and while some use Lake Village as their second, or vacation home. Many also rent their homes out for long-term or short-term vacation use too. For more information or to schedule a time to view this area contact Robert Stiles, REALTOR® at CHASE INTERNATIONAL 530-314-0352.