If a natural disaster damages your property, you have undergone a casualty loss, which can be deductible as an itemized deduction on your federal income tax return.

As a rule of thumb, to be considered a casualty loss, it must be caused by an "Act of God". Simple wear and tear over time does not count. One type of casualty loss is damage to property caused by earthquakes and fires. You may take a deduction for casualty losses only to the extent that the loss is not covered by insurance.

You can deduct only the amount of the loss that exceeds 10% of your adjusted gross income (AGI) for the year. A one-time $100 deduction applies for the year.

Example: Your home is damaged by an earthquake. Your home has a $50,000 reduction in fair market value, but your adjusted cost basis was $20,000. Therefore, now the lower limit is $20,000. Your earthquake insurance covers $10,000 of the damage. The unpaid part of your claim is $10,000. Subtracting the $100, you end up with $9,900. If your AGI is $45,000, 10% is $4,500. You can deduct the portion of your loss above the $4,500, so you subtract that number from $9,900. Your total deduction is $5,400.

Where your disaster loss exceeds your current income, you may carry back the excess loss three years to get refunds of prior years' federal tax payments. If you still have some unused loss, you may carry it forward for up to 15 years.

What happens if you do not repair or replace the damage? You are entitled to the deduction when the loss occurs. You do not have to fix the damage to claim tax deductions.

Casualty losses are always deductible in the year the casualty occurred. However, if you have a casualty loss from a federally declared disaster, you have another option: You can treat the loss as having occurred in the prior year, and deduct it on your return or amended return for that tax year. This way, you can get a quick tax refund.

For your records, you will need to have the following:

   ►   Documents showing that you owned each asset you claimed was    damaged or destroyed—for example, a deed or receipt.

   ►   Contracts or purchase receipts showing the original cost of the item,        plus any improvements you made to it.

   ►   An appraiser can determine the value before and after the earthquake      and subtract the two; the difference is your disaster loss.

This road to recovery also applies to storm, fire and theft damages. It will lead to a less painful recovery by allowing the government to help pay for the costs of repair and/or replacement.

ABOUT THE AUTHOR: Eugene E. Vollucci,  is considered to be one of the foremost authorities on real estate taxation and  investing and has authored books in these fields published by John Wiley & Sons of New York. He is the Director of the Center for RE Studies, a real estate research organization. To learn more about the Center, please visit our web site at http://www.calstatecompanies.com

UTUBE: https://youtube/868wrjNPQFM

         News      

The Cal State Companies:  Center for Real Estate Studies ¨ Cal State Properties ¨ Cal State Investment LTD Partnership

¨E-Mail CalStatecompanie@aol.com  ¨ Webpage http://www.calstatecompanies.com

Real Estate Investment Outlook

October  2019

         

                                                                                           

          LOS ANGELES, CA. The reduction of the interest rate was justified because the growth of credit demand has slowed since the beginning of 2018, and is now expanding at a rate of around 4.5%. Compared with the average growth of credit demand during the pre-crisis recovery of approximately 8.5%, this weak demand is a favorable development for  real estate markets.

          Change in the monetary policy stance in 2019 has been dramatic. The  Feds have moved from a wait-and-see attitude in early 2019 back to a let-up mode. The Fed cut rates by 50 basis points in 2019. Against the backdrop of threats and a slowing due to trade tensions, this  seems to make sense.

          Our economic expansion is established and is now officially the longest on record. While business cycles do not last forever, we should recognize that the longer an expansion lasts, the more likely it is to stagger. Another sign suggesting that our economy is in the later stages of the business cycle is the extremely low unemployment rate. The yield curve shows signs of inverting from time to time, such inversions are not a guarantee that a recession is coming. They tend, however, to coincide with an increased risk of an economic downturn six months to two years into the future.

          We feel a recession is unlikely thanks to strong household income growth. Consumer spending is likely to remain solid, but trade uncertainty will be an ongoing drag on real estate investments. Tariffs themselves are harmful to grow. The larger impact occurs because of the rising uncertainty, which brings caution.

          Tariffs make investors unsure to what may be in the future. Many investors are waiting for greater clarity. We have already seen a significant decline in activity, and more weakness in sentiment indicators is likely in the coming months.

          Despite the slowdown in investment,  we feel that consumer spending growth is likely to remain solid, supported by continued improvement in the labor market. Job gains appear to be moderating, but this is being partly offset by a faster pace of wage growth. Overall, labor income has slowed modestly, but growth is still near its post-crisis trend. The unemployment rate has declined to multi-decade lows.

          ApartmentData.com reports that currently, the residential real estate marketplace is slowing down. This specifically means that single-family homes are becoming scarce. This is likely to drive up prices in areas that are experiencing limited supply and high demand. Core Logic recently published a survey indicating that home prices are expected to increase by more than five percent by May 2020. Scarcity of affordable homes leads directly to increased demand for rental and lease properties

ABOUT THE AUTHOR: Eugene E. Vollucci,  is considered to be one of the foremost authorities on real estate taxation and  investing and has authored books in these fields published by John Wiley & Sons of New York. He is the Director of the Center for RE Studies, an educational and research organization. To learn more about the Center, please visit our web site at http://www.calstatecompanies.com

UTUBE: https://youtu.be/868wrjNPQFM

         News      

The Cal State Companies:  Center for Real Estate Studies ¨ Cal State Properties ¨ Cal State Investment LTD Partnership

¨E-Mail CalStatecompanie@aol.com  ¨ Webpage http://www.calstatecompanies.com

Just Released 3rd Quarter 2019

Leading Rental Income Markets

          LOS ANGELES, CA. The Center for Real Estate Studies (CRES) research report has just released their third quarter 2019 issue of “Market Cycles".  It gives a forward look at more than 150 income rental markets with “buy, sell or hold” recommendations. This publication gives the real estate investor a two-year head start on where and when to invest in rental income properties.

          The current number of markets in the “Sell Phase” is  forty-eight, according to Eugene E. Vollucci, Director of CRES.  The number of markets in the “Buy Phase” is eighteen. Mr. Vollucci states, “This quarter the three top buy recommendations are Milwaukee, WI, West Palm Beach, FL and Youngstown, PA. The three top sell recommendations are New York, NY, Eugene, OR and Raleigh, NC.” according to Mr. Vollucci.

          In this edition of our Market Cycles, we find the national vacancy rates in the second quarter 2019 were 6.8 percent for rental housing and 1.3 percent for homeowner housing. The rental vacancy rate of 6.8 percent was virtually unchanged from the rate in the second quarter 2018 and not statistically different from the rate in the first quarter 2019 . The homeowner vacancy rate of 1.3 percent was 0.2 percentage points lower than the rate in the second quarter 2018, but not statistically different from the rate in the first quarter 2019.

          Approximately 87.8 percent of the housing units in the United States in the second quarter 2019 were occupied and 12.2 percent were vacant. Owner-occupied housing units made up 56.3 percent of total housing units, while renter-occupied units made up 31.5 percent of the inventory in the second quarter 2019.

            Unemployment rates were lower in August in 5 states, higher in 3 states, and stable in 42 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Five states had jobless rate decreases from a year earlier, 2 states had increases, and 43 states and the District had little or no change. The national unemployment rate, 3.7 percent, was unchanged over the month and little changed from August 2018.

            Nonfarm payroll employment increased in 5 states in August 2019, decreased in 1 state, and was essentially unchanged in 44 states and the District of Columbia. Over the year, 26 states added non-farm payroll jobs and 24 states and the District were essentially unchanged. Nonfarm payroll employment increased in five states in August 2019. The largest job gains occurred in California (+34,500), Florida (+22,500), and Georgia (+20,800). The largest percentage gains occurred in Kansas (+0.6 percent), Georgia (+0.5 percent), and Arizona (+0.4 percent). Employment decreased in August in Oklahoma (-0.5 percent). 

            Twenty-six states had over-the-year increases in nonfarm payroll employment in August. The largest job gains occurred in California (+314,200), Texas (+303,500), and Florida (+221,200). The largest

percentage gains occurred in Nevada (+3.0 percent), Utah (+2.8 percent), and Washington (+2.6 percent).

            National vacancy rates in the second quarter 2019 were 6.8 percent for rental housing and 1.3 percent for homeowner housing. The rental vacancy rate of 6.8 percent was virtually unchanged from the rate in the second quarter 2018 and not statistically different from the rate in the first quarter 2019 (7.0 percent). The homeowner vacancy rate of 1.3 percent was 0.2 percentage points lower than the rate in the second quarter 2018, but not statistically different from the rate in the first quarter 2019. The homeownership rate of 64.1 percent was not statistically different from the rate in the second quarter 2018 nor from the rate in the first quarter 2019.

          The enduring strength of the apartment market was the main takeaway of the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions for July 2019, as the Market Tightness (60), Equity Financing (56), and Debt Financing (80) indexes all came in above the breakeven level (50). The Sales Volume Index (48) indicated a continued softness in property sales, albeit with considerable disagreement among respondents.
          "These latest figures illustrate that, in spite of construction levels hovering near recent highs, there remains significant pent-up demand for apartments," noted NMHC Chief Economist Mark Obrinsky. "Nearly a third (32 percent) of respondents reported stronger rents and occupancy levels, while just 11 percent indicated looser market conditions." 

          While the industry outlook is positive, political and regulatory threats like rent control threaten to upend regional markets. Among respondents to the NMHC Quarterly Survey, sixty-two percent operate in jurisdictions that have either recently imposed rent control or are seriously considering doing so. Of this group, a fifth (20 percent) has already cut back on investment or development in these markets, while an additional 60 percent is considering making changes in the future. 

ABOUT THE AUTHOR: Eugene E. Vollucci,  is considered to be one of the foremost authorities on real estate taxation and  investing and has authored books in these fields published by John Wiley & Sons of New York. He is the Director of the Center for RE Studies, a real estate research organization. To learn more about the Center, please visit our web site at http://www.calstatecompanies.com

UTUBE: https://youtu.be/868wrjNPQFM