Archive for the ‘Business and Taxes’ Category

Approximately 526,000
January 24, 2012

CCR may have said it best when they sang, It ain’t me, it ain’t me, I ain’t no fortunate one; it ain’t me, it ain’t me, I ain’t no millionaire’s son.”  As the owner of  Blue Leaf Realty, one thing I can say for sure is that good fortune has not come our way unless it was the result of hard work and personal sacrifice.  It certainly has not been the result of lucky breaks or fortuitous timing.    

Although real estate has been challenging at times, quitting never was an option.  Some, even from within our inner circle, have called us crazy; others have simply called us stubborn and left it at that.  Are we crazy?  I don’t think so, although I’ll freely admit that a stubborn streak runs through both me and my wife.  The truth is building from the ground up is difficult but it’s our nature, and for us it’s an integral part of the pursuit of the American Dream.  All along, our mantra has been that anything worth doing is seldom, if ever, easy. 

In our case, my wife and I did not inherit a company that was built by our predecessors, nor were either of us born with silver spoons.  Our real estate company was not borne out of a real estate boom; in fact, it was the opposite as we’ve been compelled to grow our company in an unprecedented downturn.  Furthermore, we did not receive funds to start our company from a wealthy relative or a venture capitalist and we have received no bailouts when times were tough.  No bank lent us money to get started, nor have we sold stock to would-be investors.  Instead, we simply put one foot in front of the other each day and relied upon common-sense, hard work, and faith in God along with a tenacious belief in the idea that the American Dream might be injured but it’s not dead – not for us at least.  

The reality is the formula for success is not that complicated and fairly easy to replicate.  It just involves a lot of hard work in the form of blood, sweat, and tears which makes all the difference, approximately 526,000 minutes worth of it every year.  In my opinion, that’s how good things, maybe even great things, get built, by layering minute upon minute of hard work and sacrifice.  That’s the way grandma and grandpa did it back when hard work mattered and personal sacrifice counted for something, and that’s the way we intend to do it – one minute, one hour, one day, and one month at a time.  We hope to see you at the finish line!


Kicking the Can Is Not A Solution
October 23, 2011

Kicking the can down the road has become a trend in residential and commercial real estate but the trend may be hurting more than it’s helping.  It seems that many have been slow to acknowledge the full extent of the long-term consequences of the unrestrained lending practices which occurred between 2001 and 2007.  Now, it seems that many believe that burying their heads in the sand until the mess blows over is a reasonable strategy.  The sad truth is the US economy is still limping along and many banks are still overburdened with non-performing and under-performing real estate loans.  As a result, kicking the can is en vogue.

 Although there have been small signs the economy is truly improving, there are many, if not more, signs which suggest the economic recovery is sputtering.  For instance, lagging home sales have continued to weigh down home builder profits.   In addition, Fed Chairman Bernanke has publicly stated that he is at a loss as to how to explain the sagging economy’s lackluster performance.  Could it be that “extend and pretend” or “kicking the can” is not a viable solution and that, without a housing recovery, the broader economy will merely continue to limp along.  It is difficult to see how kicking the can further down the road is going to accomplish much.  Maybe it’s time to get real about the economic state of affairs which starts by stopping the pretense that things are better than they really are.  Below are a few suggestions:

  • lock in the capital gains tax rate for a defined period of time
  • release trapped real estate assets into the marketplace
  • create tax incentives for investors who purchase distressed assets
  • discontinue governmental policies that encourage moral hazard
  • resist the temptation to over-regulate the lending industry
  • discontinue the practice of bailing out businesses that are deemed too big to fail

Addressing these very core problems in the real estate sector will allow us to make progress without kicking the can, and the broader economy is sure to benefit!

Gifts from the IRS
October 10, 2011

The IRS mostly taketh but some times it giveth as well.  Two great gifts, compliments of the IRS, are the 1031 exchange and the primary residence exclusion, both useful in real estate.  The primary residence exclusion is beneficial for home owners occupying a primary residence for more than two years.  It allows home owners to exempt up to $250,000 in profit if they are single and up to $500,000 in profit if they are married on the sale of their primary residence.  The other, the 1031 exchange, is used most often by real estate investors looking to trade up to a property and defer their payment of taxes.  Both are wonderful gifts that provide investors and non-investors a unique opportunity to keep more money in their own pocket and pay less taxes but both have caveats and certain criteria that must be followed in order to qualify.   Although you don’t typically think of gifts when you think about the IRS, the primary residence exclusion and the 1031 exchange are just that – gifts from the IRS.  Take advantage and don’t look a gift horse in the mouth!  The content of this blog is not intended to provide legal or financial advice.  Always consult your attorney and/or your accountant for specific advice on tax deferral real estate strategies.

If America were a business, would you invest?
March 26, 2011

Bloomberg Business ran an article recently and the title really grabbed my attention: Would you invest in a company that lost $2 trillion last year and has a net worth of negative $44 trillion?  Every American’s per capita share of the total US debt – $143,000 and growing.  That’s a lot of debt on the books for this company called USA, inc.  Whether or not to invest in the US is a really good question with a very simple answer.  If the US were a company, most people would pass on the opportunity to buy its shares.  The truth is, however, that investors from around the world continue to buy US securities every day, looking for a safe place to invest their money.  Based on America’s track record, it seems like a safe investment and historically it generally has been.  However, people always learn the hard way that the future does not always look like the past.  Countries such as Egypt, Spain, Ireland, Greece, Libya, Japan, and Iceland are learning this lesson the hard way right now.  America is not immune to hardship as the recent financial meltdown has illustrated.  America’s rapidly aging population, its shrinking savings rate, and its ever-increasing cost to fund its entitlement programs, give much to be concerned about within our own borders.  To avoid facing even greater problems down the road, the US must take bold steps today by investing in its future.  Getting the economy to grow again is the most important task.  To do so, we must improve our aging infrastructure, expand access to technology, and most importantly, improve our education for future generations.  We must act now to cut unnecessary spending, encourage entrepreneurial activity, support small business, and get back to living within our means.  The time for positive action is now!

Recovery impossible without real estate
December 16, 2010

An economic recovery without real estate is akin to fishing without a hook.  It isn’t effective.  The Wall Street recovery is good in that it makes people feel wealthier, but a true recovery must add jobs and circulate money through the general economy.  Right now, job growth is limited to a very few industries.  Hopefully, we can find an answer to unemployment beyond government jobs and health-care.  A real estate recovery would be a huge boost to the overall economy because a healthy real estate market creates jobs.  Think about the ripple effects of building one home.  The number of people who benefit directly or indirectly is amazing.  Real estate has a positive impact on white-collar and blue-collar workers alike.  It affects small and large businesses and wholesalers and retailers.  Even the tax man benefits.  Policy that engenders growth in the real industry is just plain smart because a recovery without real estate may not be a real recovery at all.

Don’t Tase Me Bro
November 10, 2010

In September 2007, a University of Florida student enjoyed short-lived fame with his ubiquitous quote, “Don’t Tase Me Bro!”  That was good for a laugh but I think what he really meant to say was, “Don’t Tax Me Bro!”   Government spending and taxation in the US are out of control!   Between taxes levied at the local, state, and federal level, it’s a wonder there is anything left for personal expenditures at all.  Add to these taxes all the other miscellaneous fees and charges levied on individuals and businesses and the situation becomes very grim indeed.  Don’t just take my word for it.  Instead, the next time you open your water bill or cable TV bill really take a close look at it.  Shocking isn’t it.  As for me, I recently paid a required fee to have the fire department come through my office and inspect it.  They checked the fire extinguisher to ensure it had enough pressure and looked around the office.  The mandatory inspection process only lasted 5 minutes if I’m being generous and the charge for this inspection – $40.  I’m not sure who receives this money or what it goes toward, but that fee equates to $480 an hour.  Multiply that times the number of businesses who pay the fee and the city has racked up some nice revenue for itself.  Anyway you slice it, $480/hr is a pretty hefty sum.  If you are like me, then you probably wonder how much of this money actually makes its way back to the fire department.  I pay this mandatory fee to the city each year with the hope that most or even a small portion of it does find its way back to the fire department but I wonder.  Instead of Don’t Tase Me Bro!, maybe the real battle cry in America should be Don’t Tax Me Bro!  I’ll take the taser over taxes any time.  Very simply, America will recover from the Great Recession when the local, state, and federal government stops overspending & over-taxing and starts really supporting small businesses.  One good place for local government to start – do away with fees such as the $40 annual fire inspection or at the very least consider a more reasonable charge for the inspection.  Don’t tax me bro!  Don’t tax me bro! Don’t tax me bro!  Don’t ta….

Q:   Are you tired of paying too much in taxes?  If so, just reply with the rally cry – Don’t Tax Me Bro!