Henderson, Franklin, Starnes & Holt, P.A.

Summer is a busy season for moving in Florida. This time of year is a popular time for families to move because it follows the spring real estate season and because school is out, parents won’t have to deal with enrolling their children in a new school mid-year. Landlords should ensure that they are aware of and in compliance with Florida law prior to renting.

Before signing a rental agreement or lease, landlords are encouraged to seek legal counsel to ensure that their lease complies with Florida law and that they are aware of the laws governing the landlord tenant relationship.

Landlord’s Responsibilities

In Florida, landlords are responsible for maintaining the dwelling. At all times during tenancy, the landlord shall (1) comply with the requirements of applicable building, housing, and health codes; (2) maintain the roofs; (3) doors; (4) floors; (5) steps; (6) porches; (7) exterior walls; (8) foundations; (9) and all other structural components in good repair. The landlord must also maintain the plumbing in reasonable working condition.

Continue Reading Florida Rentals: What is the Landlord’s Responsibility?

On December 20th, 2017, President Trump stood outside the White House and announced that Congress had passed the Tax Cuts and Jobs Act (“Tax Act”), the most thorough overhaul of the federal tax code since the Reagan administration. Like American taxpayers everywhere, most Floridians are wondering:

How will this tax legislation affect me?”

Because the most significant investment for most Americans is their home, this blog post explores how the legislation will affect home-owning taxpayers.

Capital Gains Tax on Primary Residences

One of the main concerns of home-owning taxpayers regarding the tax overhaul was whether Congress would alter the current tax treatment of capital gains taxes on the sale of primary residences. In many instances, the IRS treats the gain from real estate transactions, such as the sale of a vacation home, as taxable capital gains income. However, § 121 of the Internal Revenue Code provides an exception that exempts from taxable income up to $250,000 in capital gains for homeowners selling their primary residence. Much to the relief of homeowners and the homebuilders’ lobby, Congress did not change this provision.

Mortgage Interest and Property Tax Deduction

While Congress did not change the capital gains treatment of the sale of primary residences, Congress did make two notable changes affecting popular deductions for property taxes and mortgage interest. First, with respect to the mortgage interest deduction, Congress amended § 163(h)(3) of the Internal Revenue Code to reduce the amount of borrowed money used to purchase a home (mortgage debt or “acquisition indebtedness”) on which homeowners can deduct the interest from income.

Under the previous tax rules, homeowners could deduct from income the interest paid on the first $1,000,000 in acquisition indebtedness ($500,000 if married filing separately). The Tax Act lowered to $750,000 the amount of acquisition indebtedness on which interest deductions are allowed ($375,000 if married filing separately). It is important to note that mortgage debt incurred before December 15, 2017, is grandfathered in under the older $1,000,000 limitation. Also grandfathered in under the $1,000,000 limitation are taxpayers who had signed contracts on or before December 15, 2017, to close on the purchase of a primary residence before January 1, 2018, so long as the purchase is actually closed before April 1, 2018.

Second, Congress placed a cap on the amount of state and local income taxes and property taxes that taxpayers can deduct on their federal tax returns. Under the previous tax rules, taxpayers could deduct from their income unlimited amounts of state and local income taxes, state and local real property taxes, and state and local personal property taxes paid in the taxable year. The Tax Act amends § 164 of the Internal Revenue Code by reducing the amount of state and local taxes taxpayers can deduct from income to the first $10,000 in state and local income and property taxes ($5,000 if married filing separately). This change represents a significant adjustment and most significantly affects taxpayers in high income-tax states. Fortunately, we have no state income taxes in Florida. However, the $10,000 limitation on deduction of property taxes will still affect Florida homeowners paying property taxes above that amount.

Takeaway

Beginning in 2018, many taxpayers, but not all, will start to see federal income tax relief and lower federal income tax bills. However, while the Tax Act changes provisions that benefit some taxpayers, some changes in the Tax Act will be detrimental to other taxpayers. To know more about how the Tax Act will affect you, you should consult with a tax professional. If you have any questions regarding the Tax Cuts and Jobs Act and its effects, please contact Caleb Hinton at caleb.hinton@henlaw.com or Paul Shuman at paul.shuman@henlaw.com.

The Florida Legislature recently delivered a small win for the business community with Florida House Bill 7109. Effective January 1, 2018, Florida Statute 212.031(1)(c) is amended by lowering the sales tax levied against commercial tenants from 6% to 5.8%. A more significant decrease would have been better, but commercial tenants will take what they can get, we suspect. The tax – known as the Business Rent Tax or “the BRT” – affects commercial tenants including retail, office space, and industrial tenants.

What is the BRT?

The Florida Legislature enacted the BRT in 1969, declaring that the business of renting, leasing, letting or granting a license for the use of commercial real property is a “taxable privilege.” In part because Florida has no personal income tax, the state government relies on sales taxes, including the BRT, as a significant source of revenue. Many local governments also impose a local option sales tax on top of the state BRT.

Florida is the only state to levy a statewide tax against commercial tenants, and thereby creates a competitive disadvantage for Florida businesses that lease rather than own their commercial space.

House Bill 7109

Florida’s BRT is unique from a national perspective in two respects: not only is it the only standard, statewide sales tax on commercial real estate rents, but unlike other corporate taxes, it is not pegged to profitability. As a result, the BRT significantly raises occupancy costs on all commercial tenants, regardless of their financial condition. New and/or struggling businesses in Florida may have the greatest difficulty with the burden this tax creates, and these businesses are likely to benefit the most from the tax relief in House Bill 7109.

Takeaway

Many voices within Florida’s business community have pushed for years for steep cuts to the BRT and, beginning in 2018, start to see their lobbying efforts bear fruit. Considering the significant impact the tax has on occupancy costs, the BRT should continue to be the subject of considerable debate in Tallahassee. As with all tax matters, please consult with your tax professional. If you have answer questions regarding the Business Rent Tax reduction and its effects, please contact Caleb Hinton at caleb.hinton@henlaw.com or Paul Shuman at paul.shuman@henlaw.com.

matthewsimmons1We recently had the privilege of sitting down with Matt Simmons, State-Certified Residential Real Estate Appraiser and partner at Maxwell Hendry & Simmons.  Given the importance of the real estate market to our community, it is nearly impossible to distill the wealth of data Matt and his firm have in a short blog. But, it’s always fun to try!

Q: You have great data to share, and you mentioned that often the data can be skewed if viewed in isolation. What do you see as the most misunderstood information reflecting the SWFL market?

Continue Reading Insight into the SWFL Real Estate Market: Q&A with Matt Simmons

For the possible record number of attendees at July’s Real Estate Investment Society (“REIS”) luncheon, this won’t be news. For those folks who may have missed it, Assistant County Attorney Michael Jacob and Lee County Planning Manager Mikki Rozdolski walked us through the newly created Pine Island Transfer of Development Rights Program that is not only winning awards but has the potential to offer a workable density transfer program for Lee County developers and landowners.

Among the program’s highlights and innovative concepts is the ability to strip density units from qualifying land in Greater Pine Island and use “off-island” to qualifying receiving lands at a 1:2 ratio. For those looking to increase commercial square footage, the program also allows for the conversion of one (1) density unit to 10,000 square feet of commercial retail and office space. Attorney Jacob noted there is no limit to this conversion (i.e. if your project needs an additional 30,000 square feet, all you need is three (3) density units).

Another novel aspect of this program is that the land from which you take the units does not necessarily lose all economically viable use merely by participation in the program. An example Planning Manager Rozdolski provided was that you could strip off the development units from eligible property, but use that same property for limited agricultural uses, like growing mangoes and then selling those mangoes from a farm stand on the property. Clearly this incentivizes participation in the program since the landowner benefits from selling the units but continue to receive economic benefit from the property as well as general use and enjoyment of the property. This is in stark contrast to most other attempts at a TDR program where landowners remove development rights and essentially lose any benefit of owning the property.

The good news for anyone who wasn’t with us at REIS, the county has done a phenomenal job at getting the word out about this program and making information as accessible as possible. Head on over here to get additional information and dig into the myriad of innovative and inventive aspects this program has to offer.

The term “due diligence” gets thrown around a lot in the development world, but often with little regard for what the term entails. As with all things relating to property, this post is in no way intended to encompass all considerations in due diligence as properties are unique and present specific needs of review. However, the following list provides a brief glimpse into items to review when you are considering the purchase of real property for development in Southwest Florida: Continue Reading 8 Practical Tips for Land Use Due Diligence in Southwest Florida

Turner 2015 WEBAustin joins us as a recent graduate from FSU College of Law after interning with our firm last summer. Austin has already been busy posting some great content to this blog (here and here) so look for more great posts as he settles in. Please join us in welcoming Austin!

Austin served as a summer associate with Henderson Franklin in 2014. While in law school, he worked as a law clerk at a large land use and environmental law firm located in Tallahassee, Florida. Austin also spent time during law school at the Florida Department of Environmental Protection working pro bono at the Defense Section of the Office of General Counsel.

Austin received his undergraduate degree from the University of Central Florida (B.S., 2012) and his law degree from Florida State University College of Law (J.D., summa cum laude, 2015). He can be reached at 239.344.1178 or via email at austin.turner@henlaw.com.

 

tax burdenThose owning real property in Lee County have likely received their annual TRIM (Truth in Millage) Notice. We have found that some questions continue to repeat every year once taxpayers receive their TRIM Notices.

To help taxpayers understand what the TRIM means for them, we thought it would be helpful to go through a few quick tips for what to look for when reviewing this important document: Continue Reading Helpful Tips for Reviewing your TRIM Notice

Mortgage contractIn April of last year, David Fowler shared a post about a seller’s obligation in a residential sale to disclose facts or conditions about the property that have a substantial impact on its value or desirability, and that are not easily observable to a buyer. As the post outlined, most of the disclosures are property specific, like the presence of mold or wood destroying organisms, or whether essential components of the home, such as the roof, plumbing or HVAC, are in disrepair. Sellers typically inform buyers of these conditions in a disclosure form usually provided by the seller’s real estate agent. There are, however, other disclosures required by Florida law that are equally as important to a buyer in making an informed decision whether to purchase a home.

Here are some of those disclosures that parties involved in the sale of a residential home should also be aware of:

Homeowners Association and Condominium Association

Continue Reading Important Reminders Regarding Disclosures

construction-money.jpgAs discussed in a previous blog on this topic, impact fee rates in Lee County continue to be a focus for many in the community. At its February 3rd meeting, the Board of County Commissioners (“BOCC”) adopted the proposed rate schedule which included a reduction in road impact fees coupled with a significant increase in school impact fees. After significant input from the community and discussion among the BOCC, Commissioner Kiker moved to adopt an increase in impact fees to 45% of the original rates to take effect March 16, 2015 upon the sunset of the current 80% reduction. The BOCC is now positioned to take a final vote on impact fee rates at its meeting on March 3, 2015 before the current reduction ordinance sunsets on March 13th.

Here are 3 ways you can get involved in this unquestionably important vote:

  • Catch up on all of the happenings related to impact fees and review any related studies, documents, ordinances or even review meeting videos at the county’s website here
  • Call or write the County Commissioners to express your opinion; you can locate your Commissioner by visiting the county map here and view contact information
  • Plan to attend the March 3rd meeting in BOCC Chambers to provide public input

As the Lee County real estate market continues to find its way, the issue of impact fees is unlikely to leave the forefront of economic debate anytime soon.