2020 has been a year with a lot of challenges. The Coronavirus outbreak has affected the flow and growth of industries across the globe. The real estate environment has not been left behind. Home prices are gradually rising day by day, which has affected the economic climate to a large extent. The early part of 2020, before the Coronavirus outbreak in the real estate industry, has been strong. There are new real estate laws that have been put in place to help deal with the crisis industry. The following are six things you need to know about real estate law in 2020.
1. Qualified Improvement Property
The qualified improvement property is entitled to depreciation after the CARES Act corrected it. The correction is applicable for both 2019 and 2018. For the taxpayer to take advantage of this correction, they need to file amended returns. The law will help many /people benefit from this establishment.
2. Credit Score Requirements
The immediate effect in mass housing and lenders specializing in home loans has led to the increment of credit score requirements. This has decreased the number of people borrowing. At the same time, Lenders started extending loan payment up to 90 days. This provision is for preventing borrowers from evicting tenants from not paying rent. When a property owner’s mortgage has insured or guaranteed the property, the owner cannot remove the tenant for non-payment of fees or rent.
3. Net Operating Losses Carry Back
Before the real estate new law, businesses could not carry-back net operating losses to previous years. The capping of the net operating losses was done at 80% of the business’s taxable income. Now a company can carry back the NOLs for five years. The Act has suspended the net operating losses deduction on taxable income. It has allowed businesses to finance their 2020 income accruals at 100%.
4. Payroll Tax Credit
For businesses affected by the government, there is a provision of payroll tax credits for employees to be retained. This provision has also allowed firms to defer a part of their social security payroll taxes for the year’s wages. Besides, businesses can use their 2019 adjusted taxable income for the year 2020 to determine the maximum business interest to be deducted for the year.
5. Mortgage Loan Interest Rates
The mortgage loan interest rates before the pandemic were at 4% but have dropped 3% over time. A drop that has negatively affected the sellers since they are getting lesser payments. On the other hand, the buyer is advantaged because he can get a house at low pay. As a buyer, do not just purchase a home because of the lowered interest rates but consider the conventional 15 years fixed-rate mortgage to avoid the likelihood of paying extra interest that may be hidden. With this kind of interest rate, you will know when your loan will be completed. The low-interest rates have also triggered the real estate market.
6. Social Distancing Law
The social distancing law has affected the real estate operation in a significant way. For example, when buyers want to view houses, the seller has to improvise protection supplies such as surgical boots, face masks, sanitizers, and gloves. The agents have to spend some money on preventing the spread of the Coronavirus from their pockets. The potential clients must also answer some standard COVID-19 questions before they view the house. Examples of these questions include whether they have recently traveled or had any COVID-19 symptoms. A potential buyer can be denied the right to access the premises based on how they have answered the Covid-19 standard questions.
Due to the social distance, realtors and other agents have been forced to adapt to the social media platform in displaying the available properties. They include Facebook Live page and zoom. Most sales nowadays are being facilitated on the online platform, and people have started embracing the new norm in the industry.
It can be stressful during this pandemic to know which route to take in the real estate market. Considering the highlighted things, you need to know about the real estate law in 2020 can help you make better decisions.