In response to COVID-19, we have seen a mixed bag of good and bad government actions for landlords.
Here we have listed five of the most impactful legal changes:
1. Rent-deferred living on the West Coast: moratorium on evictions
In multiple states, counties and cities, politicians have shifted the burden of the national quarantine from renters to landlords by suspending evictions. Many owners of rental housing and some commercial properties may have to wait months to be paid, in some cases forcing them to access retirement savings to replace the income on which they depend to live. And some landlords operate on an accrual basis, meaning they could be liable for tax on delayed income. As a silver lining, some of these rules allow landlords to defer payment of their mortgages over the same time period.
2. CARES Act loans for some real estate business owners
There are some significant benefits for business owners in the recent CARES Act, unless your business is being a mom-and-pop owner of apartments or other small rental housing, in which case you may be excluded. On the other hand, owners of hotels and nursing homes likely will benefit. Check with your attorney before spending time completing a loan application.
3. CARES Act tax relief
Other benefits from the CARES Act include an employee retention credit, payment deadline extensions and an expansion of loss-carryover rules. Be sure to check with your tax professional to learn how these rules may apply to you. Here is the Treasury Department’s official summary: https://home.treasury.gov/policy-issues/cares.
4. Additional tax deadlines extended by IRS
In addition to the CARES Act extensions, the IRS and most states announced extensions for deadlines of multiple filings, payments and schedules. Please see IRS Notice 2020-23 and check with your tax professional before assuming that a deadline does, or does not, apply to you or your business.
5. California: extended deadlines for tenants in eviction proceedings
Beyond the eviction moratorium, California also extended the entire eviction procedure timeline, pushing today’s cases months into the future, even after the moratorium is lifted. Other states likely will follow the same approach.
If you or your clients are considering selling a rental property in the midst of this unprecedented economic environment, please give 1031 Capital Solutions a call today at (800) 445-5908 or visit our website, 1031CapitalSolutions.com.
This information is for educational purposes only and does not constitute direct investment advice or a direct offer to buy or sell an investment, and is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation. Because investor situations and objectives vary, this information is not intended to indicate suitability for any particular investor. The views of this material are those solely of the author and do not necessarily represent the views of their affiliates.
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