DO YOU WORK WHILE ON VACATION?

A recent survey by FPC, an executive search firm, says that more than 1/3 of the employees tested check their e-mail and voice mail while on vacation.  I went to England on vacation last year, and darned if I didn't e-mail messages back to the office while visiting "Big Ben."  The survey further showed that entry level and mid-level employees acted on these messages more than managers who generally responded to emergency missives only.  The President of the FPC said: "  ...people are finding ways to keep in contact while on those few precious days away from the office."  I guess I am one of the few managers that calls in every day, even while on vacation.  I know its crazy, but I just feel that if someone in the office needs me or has an emergency, then I should try to help resolve the problem.  I'm going to the European wine country this summer, will I try to not make as phone calls and e-mails to the office?  I don't know.

THE SKY IS FALLING, THE SKY IS FALLING

The sky is falling, the sky is falling -- well not really.  However, new home construction numbers are falling again.  The Commerce Department said that housing starts fell 7.8% in March of 2006.  The chief economist for the National Association of Home Builders, Dave Seiders said:  "...All the indicators about demand have been down."  The Wall Street Journal reports:  "With sales declining, interest rates moving higher and the inventory of unsold homes increasing, economists have been expecting builders to respond by slowing the pace of construction....With sales cancellations up, consumer traffic down and the need to offer incentives rising, builders are getting discouraged."  Is the sky falling?  I don't think so--I'm no "Chicken Little"--but there is no question that there is going to be a slow down in the residential new home market over the next couple of months.

TIMES ARE A-CHANGING

As reported in the March 28, 2006 issue of The Wall Street Journal, the housing market is definitely cooling down around the United States and as a result, real estate brokers are recommending new techniques in the selling and buying of personal residences.  What are they recommending?  First and foremost, a number of real estate brokers are recommending that the seller price their home in the bottom 25% of comparable properties--that way they have a better chance of selling their individual property quicker than those listed in the same price range.  It is also suggested that first time buyers should not "overly stretch" their finances, expecting  their new home purchase to continue to escalate in value.  Additionally, corporations are instructing their employees that are relocating to "...steer clear of new subdivisions where competition from brand new construction could make reselling difficult." 

These ideas are not necessarily new, but should be heeded, since the National Association of Realtors (NAR) predicts that sales of existing homes will drop by 5.7% this year.  One final point---interest rates on houses are higher today, thereby making the purchase less affordable in many metropolitan areas and it is expected that the Federal Reserve will increase their rates again, which  "...could push mortgage rates even higher."  As the article emphasizes:  "...after several years of sellers calling the shots, 2006 is shaping up to be a market in which buyers are gaining bargaining power."  Yes, times--- they are a-changing.

CONDO CONVERSIONS

Here is an excerpt from an article that I have just written on condo conversions, Why Condo Conversions are Hot.  "Converting apartment units into condominiums for sale has grown, of late, into a very lucrative way to cash in on the escalating sales prices of the past few years. Developers are canvassing markets across the country, and are paying substantial premiums to acquire and transform both large and small rental properties into condos.  The apartment owners are finding that their apartment units are worth much more if divided and sold as condos, rather than marketed as a single apartment complex.   Moreover, rents have not kept pace with the increasing sales prices for apartment units, so many owners decide that a sale makes economic sense, as opposed to continuing to collect monthly rent. There are many more potential unit buyers than there are buyers of entire buildings, so a gradual sale of individual converted condominiums generally will engender a higher sales price in the aggregate than a single sale to an owner-operator of apartment complexes."

"Some of the leading regional markets for conversions are those in resort areas and in growing retirement areas, as the baby-boom population continues to age and increase their leisure options.  What about office condo conversions?  The newest explosion in the real estate market place is office buildings that are being converted into condo's.  Last week, The Miami Herald reported that numerous office buildings have been converted into office condominiums and that....office-condo conversions have targeted smaller buildings because small-business owners tend to have more predictable space needs.  In contrast, tenants requiring significant space--such as big law firms--ususally lease because they need flexibility to expand and contract."  Only the future will tell whether the condo-office market is ready to go large scale.

LOVE, MARRIAGE & MONEY..continued

Continued from April 10, 2006 blog

Question #5 --What are Your Financial Aspirations?  What do you hope and dream for?  What colleges do you want your kids to attend?--Get your priorities written down and then follow them.

Question #6--What are Your Career Expectations?  Are both of you expecting the other to work for a number of years?--Are you planning for children?  Are both of you planning to continue working thereafter?  Does one of you plan to change their career path?  How will these changes affect you financially?  These are important issues.  I was going to be a school teacher and in fact taught public school for a couple of years.  I then wanted to change career paths and went back to college to become an attorney.  This decision initially changed our financial condition, but created a more stable income in the future. 

Question #7--How Do You Propose to Divide the Financial Duties?  Who is going to handle the financial duties?--Do both of you want to handle that job?  I always recommend that both spouses be up to date on the financial accounts of the marriage. 

Question #8--How Many Checkbooks Will There Be?  One, Two or Three?--Is a joint account the right answer?--..."Jumping into a joint account as newlyweds isn't always the smartest approach until you've had time to learn each other's financial habits.  For instance, if one partner puts every purchase on a credit card, and the other uses only cash, the family's income may not stretch across the monthly paychecks--especially if neither spouse keeps close track of how much they've spent."

Finally, the author asks the final question.

Question #9--Do You Have a Basic Understanding of Money?  Do you have an understanding of how checking accounts work; how to balance a checking account; how credit cards are assessed; and how 401 (k) plans work?  It might be a good idea to talk to a financial advisor/planner to learn more on these issues.  Again, all of these questions are important issues to be discussed and reviewed prior to getting married.  For a more complete review of these nine issues, go to page R1 of the March 27, 2006 of The Wall Street Journal.

LOVE, MARRIAGE & MONEY

Recently, The Wall Street Journal did a wonderful article on the nine questions partners should ask each other before they tie the knot. See: Love & Money, The Wall Street Journal Page R1, March 27, 2006 by Jeff D. Opdyke.  Because the handling of Section 1031 exchanges involves the deferral of tax payments and revolves around how one handles their own money and debt, I thought a brief synopsis of the article would be of interest to you, which I will cover in two blogs instead of one.  "...no matter if you are 20 years old and marrying for the first time, or 50 and planning wedding No. 3, the answers will give you a better understanding of how you each view money--and the role it will play in your relationship." 

Question # 1--WHAT ARE YOR FINANCIAL ASSETS AND LIABILITIES?  Probably the most difficult and basic question to ask and answer.  How much you earn and spend; who do you owe and what, are important issues that need to be discussed at the beginning of your relationship.  "The first time you and your spouse try to finance a car or buy a house, for instance, the debt will show up on a credit report." 

Question #2--How do you use debt?  Did you borrow for college or large credit card debt?--how did you intend upon paying off these debts?--The issue here is, are you marrying "...into a potential debt problem." 

Question #3--What is your money history?  Did you come from a household where money was spent and given freely or did you have to "earn" it the "old fashioned way".  Because the author points out that ..."the roots of these behaviors are rarely discussed, yet they define how you and your partner.." will operate in the future. 

Question #4--Do We Need a Prenup?  As an old time lawyer I know from experience that this is the most explosive question because the issues always raised are:  What, you don't trust me or you don't think this marriage will survive?  As suggested, if you can't or don't want to bring up the issue, have your financial advisor ask the question of both of you.  It's important to have protection for both of you. 

Questions five through nine will be covered in the next blog.

A LITTLE CHUCKLE AS TAX DAY APPROACHES

I love my job as a Qualified Intermediary, because I get to help taxpayers defer the payment of their Federal and State taxes, which results in the taxpayer having more funds to invest in replacement property.  In many cases, the taxpayers may never pay taxes.   Now, as I prepare to pay my Federal Income Taxes, I think of all those taxpayers that may need a laugh.  So here are some humorous quotes on taxes:

“The difference between death and taxes is death doesn’t get worse every time Congress meets.”  Will Rogers

“A taxpayer is someone who works for the federal government but who doesn’t have to take a civil service examination.”  Ronald Regan

“They say that true democracy is a perfect marriage between the people and the state—and in April the government reminds us that they married us for our money.” Anonymous

“I’m proud to be paying taxes in the United States.  The only thing is – I could be just as proud for half the money.”  Arthur Godfrey

“The trick is to stop thinking of it as ‘your’ money” -- Tax Auditor

THOU SHALL NOT QUOTE THYSELF

OK, so I shouldn't quote myself---but sometimes rules are meant to be broken--therefore--I wrote an article titled: Designs for 1031 Tax Deferred Exchanges, which appeared in the April 2006 issue of CPA Wealth Provider. In that article I discussed how you can delay the time limits on a tax deferred exchange. Which brings up the initial question: WHEN WAS THE PROPERTY TRANSFERRED? My response in that article is as follows:

"To satisfy the IRS's requirements for tax-deferred exchanges, it is important to properly determine the date of transfer of the relinquished property and the receipt date of the replacement property. Therefore, accountants must advise their clients carefully when a transfer is deemed to be made for federal income tax purposes.

The federal courts have determined that ownership of real property for federal income tax purposes happens when the transfer of the "benefits and burdens" have occurred. There are a number of questions that are used to determine the transfer of these "benefits and burdens." The most important questions that the IRS will ask are:

1. How did the parties treat the transaction?
2. Was equity acquired in the property?
3. Did legal title pass?
4. Did possession of the property pass to the purchaser?
5. Does the seller have an obligation to sell, and conversely, does the purchaser have an obligation to make payments?
6. Who is responsible for paying the real property taxes?
7. Who receives the profits from the operation of the property?
8. Who bears the risk of loss or damage to the property?"

I kept the quote from the article short. I really enjoyed quoting myself. For more information on the subject and methods to delay the time limits set out in Section 1031, either review the article or go to our website at: bayview1031.com.