Friday, January 29, 2010

More Short Sale Taxation News: PG County "Undecided" in how they will handle

While Anne Arundel County announced earlier that they will assess recordation taxes on sales price, Prince George's County has not yet decided on the matter.

An email from the Prince George's County Association of REALTORS® states that:

The Finance Director, Michael Dougherty, communicated with PGCAR by phone late yesterday (Thursday 1/28/10). He is suggesting that REALTORS® and title professionals who have settlements pending over the next several days contact him directly to negotiate the tax. Mr. Dougherty offered his direct line, 301-952-4013. PGCAR recommends that REALTORS® and others print the attached Attorney General opinion and make contact with Mr. Dougherty as he suggests.

We will continue to keep you posted on this issue....

Thursday, January 28, 2010

Baltimore Sun: Anne Arundel reverses decision on taxing short sales

As we reported here on January 8th, several counties, including Anne Arundel County, had decided to use unpaid principal mortgage balance rather than sales price as a basis on which to assess recordation taxes. Naturally, this decision was largely condemned by the Maryland real estate and taxpayer community.

Today the Baltimore Sun reports that Anne Arundel has backed down from this practice, citing an opinion from the Maryland Attorney General that the "practice isn't supported by state law." The full article can be found here. The county will instead assess recordation tax on the sales price as it previously had.

Montgomery County had also attempted to implement a similar taxing scheme, but backed down shortly after announcing it.

This is great news not only for Maryland tax payers and real estate practitioners, but also for folks everywhere. The American Land Title Association was closely monitoring the situation here in Maryland, as a successful implementation of this by one or more counties could have encouraged others to do the same.

Tuesday, January 12, 2010

ALERT: Montgomery County decides to "review" its short sale taxation practice

As we noted here, several Maryland counties, including Montgomery County, planned to charge transfer tax on the unpaid principal balance of the mortgage rather than the sales prices. After hearing from many of us who protested this change, the Transfer Office sent out the following message today:


Dear Clients of the Montgomery County Transfer Office:

We have decided to initiate further review of the Short Sale issue.

Until our review is complete, you may continue to submit Short Sales for processing (at the contract purchase price) as in the past.

Note: If, after further review, the final conclusion is that “consideration” may exceed the Short Sale purchase price, we will give you ample advance notice of this result and the appropriate procedure for calculating “consideration”.


(my emphasis added)

In short, Montgomery County has temporarily suspended its plan to tax on indebtedness, and will tax on the contract price. They may - after review - decide differently, but for now we are operating under the old rules.

Stay tuned....

Friday, January 8, 2010

ALERT: Several Maryland Counties Indicate They Will Use Unpaid Balance of Mortgage as Consideration for Short Sales

(Note: This story was updated here on January 12th. Montgomery County is currently "reviewing" its taxation plan and during this review process will tax on the sales price.)

We have recently learned that both Anne Arundel and Montgomery counties in Maryland plan to charge transfer tax on the unpaid principal balance of the mortgage as if the excess debt over and above the sale price is being waived/cancelled for short sale files.

Transfer and recordation taxes are generally a function of sales price. In these short sale scenarios, however, the counties believe the taxes should be based not on the sales price but on the amount of indebtedness the seller has been relieved of (which is, of course, typically more than the sales price).

We are hearing that Anne Arundel county will require a copy of the short sale approval letter (if it contains the actual principal balance due; if not, they will take the last monthly mortgage statement from the seller) and payoff statement for recording, but that Montgomery county will not. We are also anticipating that other counties may follow suit.

I'm an agent, what should I be doing?

Understand that in short sale situations the title company may be collecting taxes that are calculated on the unpaid mortgage balance, and not the sales price -- starting immediately. We hope the Maryland Association of REALTORS (MAR) and the Maryland Land Title Association (MLTA) will step up and seek more clarification (and hopefully get these decisions reversed), but for now we all want to ensure the documents get recorded.

If you would like a more detailed explanation for Montgomery County short sales, please check this blog post courtesy of Coldwell Banker's Darrin Friedman and Paragon Title's Dick Fritts.

Stay tuned to see how this plays out.

Tuesday, January 5, 2010

Virtual Real Estate BarCamp: Brief Recap

Yesterday marked the second installment of Jim Cronin and Real Estate Tomato's Virtual Real Estate BarCamp, prominently held in a computer near you. Across the country, 1000's of real estate agents and professionals logged into various webinars to see presentations by some of the best in the space. Here are a few I was able to attend (at least in part) and at least one takeaway from each.

Sherry Chris on Next Generation Brokerages

Sherry talked about the brokerage of the future. Sherry sees less physical office space, more technology, and is committed to helping agents generate leads and convert them. She cited NAR's statistic that 80% of people who list their home do not use the REALTOR(r) who sold it to them. Sherry and BHG's vision on Next Generation real estate can be found here.

Jeff Turner on Listening with Intent

Jeff provided the group with some great Twitter tools to allow you really listen to see who is saying what about a particular topic, including TweetGrid and Twazzup. I learned that "retweeting" later allows you reach a different group of people, and thereby makes you a better listener.

Jay Thompson on Getting Your Blog On

This was the most topical for me, as I am struggling to blog consistently. Jay talked about what to blog about, when to blog, and most importantly to focus more on consistent, passionate content than search engine optimization (SEO). Jay's presentation can be found here.

Rob Hahn on Social Media Heresies

Rob's premise was simple yet powerful: focus on making a better product or providing a better service, and let your fans use social media for you. He cited Apple as a company that does nothing directly in the social media space, but is obviously highly successful and relies heavily on its customers to market for them. Rob's entire presentation can be found here.

Keep an eye on the Virtual Real Estate BarCamp website (or the regular Real Estate BarCamp site) if this stuff interests you and you want to attend one yourself. Lots of knowledge, no cost!