Confused About the Core Course?

Written by Walter Boomsma, instructor. See his blog.

door_decision_pc_400_clr_2583-300x218The Maine Real Estate Commission recently introduced a new core course. Well, more accurately, TWO new core courses. This means a lot more options for licensees but it also means a lot more potential confusion.

Let’s start with the basics. Most know that 21 hours of continuing education are required to renew a real estate license and those 21 hours must include a core course.  The confusion often comes about when there is more than one core course being offered. This newest release means that for a few months, there will actually be three core courses available. Which one do you take?

The answer lies in knowing when your license expires and what type of license you will be renewing. If your license expires on or after April 1, 2015:

  • If you are renewing an Associate Broker or Broker License, you’ll need to take the Core Course for Brokers and Associate Brokers – I.”
  • If you are renewing a Designated Broker License, you’ll need to take the “Core Course for Designated Brokers – I.”

It’s really that simple–on or after April 1. Just understand, the course required is based on the license you hold. Designated Brokers must take the Designated Broker Course. If you are a Designated Broker, taking the course for Brokers and Associate Brokers will not satisfy renewal requirements. Likewise, Brokers and Associate Brokers must take the Broker and Associated Broker Course. Taking the course for Designated Brokers will not satisfy renewal requirements.

It may well be that the best approach is to take both courses! You’ll still get three hours of credit for the course that isn’t required. For example, a Designated Broker must take the “Core Course for Designated Brokers – I” and would earn three credit hours.  That Designated Broker could then take the “Core Course for Brokers and Associate Brokers – I” and earn three credit hours for a total of six towards the requirement of 21.

What if your license expires before April 1, 2015? In an attempt to keep it simple, all that happens is you have one more option and this third option is the same for all licenses.

The two courses already mentioned work the same–you would take one of those two courses based on what license you are renewing. All licenses have a third option of taking theWorking With Buyers – What Have We Agreed To? Core Course”

In other words, if your current license expires before April 1, 2015, here’s how you could meet the core course requirement:

If you are an Associate Broker or Broker:

  • Take either the Working With Buyers – What Have We Agreed To? Core Course” or Core Course for Brokers and Associate Brokers – I”

If you are a Designated Broker:

  • Take either  Working With Buyers – What Have We Agreed To? Core Course”  or Core Course for Designated Brokers – I”

On or after April 1, 2015 the “Working with Buyers” course will NOT satisfy the core course renewal requirement.

This really sounds harder than it is, but you do need to be certain you “get it right.”

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REEA Spotlight Member

The December 26, 2013 Spotlight Member of the Real Estate Educator’s Association (REEA) website is Arthur R. Gary! See their front page announcement here, where Arthur’s photo and profile will be featured for the day.

Delayed Start for Broker Course

Written by Walter Boomsma, instructor. See his blog.MH900439339

The Broker class scheduled to start on September 11 has been delayed and will now begin on October 9th… It’s a Wednesday class that will qualify you for a broker’s license. In other words, you do not have to  want to be a designated broker to benefit from this course! In addition to going into far greater detail on familiar topics; this course adds some topics not covered in other qualifying education courses such as sales agent and associate broker.

One very important one is “negotiation” — you’ll see the value and benefits of using principled negotiation over positional bargaining. And the topic of “ethics” will certainly make you think. You’ll also benefit from exploring some basic training techniques and consider the role of policy in building your business as an individual as well as a company.

But wait, there’s more! How about “risk management” strategies? Are they ways to minimize your exposure to complaints and law suits?

If you’ve held a broker’s license for a while, you might also consider re-taking the course as a refresher and to see how much things have changed since you were licensed. As a reward for doing so, you’ll receive 18 hours of continuing education credit! (You’ll still need to take the current core course to meet the full CE requirements.)

You can register for the course by calling  207 856-1712 or visiting the Arthur Gary School of Real Estate website.

Everything You Need to Know to Defer Taxes

Written by Patty Flowers. Patty Flowers is AVP for Investment Property Exchange Services (IPX1031®) and a Certified Exchange Specialist®. See her website

As we roll into the summer, it’s refreshing to see continuing economic improvement mirroring the growth of income property sales and 1031 Exchanges. However, the excitement of an increased property sale value can be quickly diminished with unexpected taxes. Many real estate investors are surprised to learn that taxes on their profits are substantially higher this year. When investment real estate is sold in 2013, some taxpayers could pay up to 20% capital gains tax, a 3.8% healthcare tax, depreciation recapture tax and varying state imposed taxes. Added together, these taxes can total anywhere between 30-40%, making 1031 Exchanges an invaluable wealth preservation tool.

Tax deferral is the hot topic in the real estate community and a 1031 Exchange still allows taxpayers to defer all of these taxes by simply rolling their profits into another property or properties. While the concept of a 1031 Exchange is straightforward, some investors and advisors may not have participated in a transaction for many years and may need to be updated on how to properly execute a 1031 Exchange.

Know your options and make informed decisions for your next 1031 Exchange transaction. Register today for IPX’s two complimentary webinars!

A 1031 Exchange Introduction and Refresher Webinar

This webinar will be held on June 12th and will provide a comprehensive foundation of 1031 Exchange information. Learn the basic rules and regulations and how to apply these to your transaction for maximum benefits.

Click here to register for the June 12th webinar

Advanced 1031 Exchange Issues Webinar

This webinar will be held on June 19th and will discuss the most recent changes in tax deferred exchanges and will cover topics such as reverse exchanges, build-to-suit exchanges, using seller financing in a 1031 transaction, and related party issues.

Click here to register for the June 19th webinar

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Tax Deferral in the Face of The 2010 Health Care Bill & the Expiration of the Bush Tax Cuts

Written by Patty Flowers. Patty Flowers is AVP for Investment Property Exchange Services (IPX1031®) and a Certified Exchange Specialist®. See her website.

Although George W. Bush has been out of office for four years, the implications of his tax cuts are still in
place….but perhaps not for long. In 2001, Congress passed The Economic Growth and Tax Relief
Reconciliation Act of 2001 (a.k.a. “The Bush Tax Cuts”) which effectively lowered the Federal capital gains tax to
15% on long term investments. This means that an investor can expect to pay 15% of the gain to the Federal
government if they decide to sell and “cash out” of their investment property instead of completing an IRC §1031
exchange.

For example, if an investor bought a commercial building in 1995 for $1 Million and sells it in 2012 for $2 Million,
they can expect to pay approximately $150,000 (15%) in Federal capital gains tax. (Note: For simplicity, this
example does not address depreciation recapture taxes, state taxes or improvements to the property.)

As it stands right now, “The Bush Tax Cuts” are set to expire at the end of this year. With 2013 fast upon us, it is
possible that “The Bush Tax Cuts” will fade into the annals of history, thus causing the long term capital gains
tax on investments to rise from 15% to 20%. Although this 5% increase seems minimal, the investor with the
$1million gain would expect to pay an additional $50,000 in capital gains tax if they sold and “cashed out”, rather
than exchanged into like-kind property.

Additionally, beginning January 1, 2013 certain taxpayers will be subject to a 3.8% tax on investment income as
provided in the 2010 Health Care Bill. The tax will be imposed on passive investment income including, but not
limited to, capital gains, rental income, interest and dividend income for individuals whose annual income
exceeds $200,000 or married couples who file jointly and whose annual income exceeds $250,000. This new
tax on investment income results if the taxpayer is a passive investor in relation to the investment creating the
income. There are many nuances to this tax, but its applicability and impact should be contemplated in any
decision to sell.

Using the example above, a single person with a $2 Million Adjusted Gross Income (AGI) with $1 million of
recognized gain from the sale of a passive real estate investment would pay 3.8% on the lesser of AGI above
$200 thousand or the recognized gain. In this example, the amount of gain ($1 million) is less than $2 million of
AGI minus $200,000 ($1.8 million). Applying the 3.8% tax to the $1 million of recognized gain generates
$38,000 of additional tax.

Assuming the expiration of the Bush Tax Cuts and the facts of our example above, the investor choosing to
complete a §1031 exchange rather than an outright sale would defer all gain recognition and therefore defer at
least $238,000 in federal taxes. Note that since none of the gain is recognized in a §1031 exchange, both capital
gains and the 3.8% healthcare tax are deferred.

Be certain to consult with your tax and legal advisors before entering into any plan relating to taxes and estate
planning. For more information about §1031 exchanges, please contact me.

We, at IPX1031®, pride ourselves on not only being the industry leader in service and security, but we also strive
to help our clients and their advisors keep current on tax issues pertaining to §1031 exchanges and
applications for them. We aim to be your complete information resource. For more information about us or our
complimentary monthly webinars about 1031 exchanges, visit our website at http://www.ipx1031.com.

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