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COVID-19 Relief: Tax Changes Real Estate Investors Need to Know

On March 27, 2020, the US Congress passed, and President Trump signed into law the Corona Virus Aid, Relief, and Economic Security (CARES) Act. This is a significant relief bill that provides approximately $2 trillion worth of economic assistance to individuals and businesses.

What you need to know as an Individual

  1. Extension until July 15, 2020 to file your 2019 tax return.
  2. Extension until July 15, 2020 to pay your 2019 tax due.
  3. Extension until July 15, 2020 to make IRA contributions for 2019.
  4. Extension until July 15, 2020 to pay your first quarterly estimated tax for 2020.
  5. $1,200 stimulus payment per adult earning $75 and joint filers earning less than $150,000.
  6. Lesser amounts available for individuals earning $75k – $99k and joint filers $150k-$198k.
  7. $500 per dependent child age 16 or younger.
  8. Federal student loans deferred through September 30, 2020.
  9. Unemployment increased to $600/week includes self-employed, Independent Contractors and non-profit employees. Duration extended 13 weeks beyond existing 26 weeks, but the benefits may vary by State.
  10. 10% penalty for early withdrawals from Retirement Accounts is removed up to $100,000 and no Required Minimum Distributions required for 2020.
  11. No mandatory 20% withholding for rollover distribution and taxes on a coronavirus-related distribution can be paid over a three-year period.
  12. Employees can receive pay to stay home under the Family First Coronavirus Response Act, sick leave for two weeks and family leave for five weeks.

What you need to know as a Real Estate Business Owner

  1. Paycheck Protection Program – This loan program provides $349 billion in funds for small businesses with 500 or fewer employees. Loan will cover payroll for six weeks up to $1,540 per week per employee capping at $100,000 per employee. Max loan is the lesser of 2019 monthly payroll costs multiplied by 2.5 or January and February payroll 2020 if not in business in 2019, or $10 million. Funding can help cover utilities, communication, insurance and rent. If funds are used to cover qualified expenses for eight weeks, the loan is eligible for forgiveness and is not subject to income tax.
  2. Economic Injury Disaster Loan Emergency Advance (EIDL Loan Advance) – This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program. $10,000 available via direct deposit for qualifying businesses, sole proprietors and independent contractors.
  3. SBA Express Bridge Loans – Enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.
  4. SBA Debt Relief – The SBA is providing a financial reprieve to small businesses during the COVID-19 pandemic.

What you need to know as a Landlord with a Federally backed mortgage

  1. Prohibition on foreclosures of all federally backed mortgage loans for a 60-day period commencing on March 18, 2020 except with respect to vacant or abandoned property.
  2. Up to 360 days of forbearance on residential (up to 5 family) property mortgages backed by the federal government.
  3. Up to 90 days of forbearance on multifamily (more than 5 family) property mortgages backed by the federal government. These borrowers may not evict or charge late fees or penalties to tenants during the forbearance period.
  4. Residential landlords cannot recover rental units or charge late fees or penalties for 120 days from March 27th, 2020 in the event that a landlord’s mortgage is insured, guaranteed or assisted in any other way by the U.S. Department of Housing and Urban Development (HUD), Fannie Mae, Freddie Mac, the rural housing voucher program or the Violence Against Women Act of 1994.

What your tenants need to know

  1. $1.25 billion for Tenant-Based Rental Assistance, which includes providing additional funds for public housing agencies to maintain normal operations.
  2. $1 billion for Project-Based Rental Assistance.
  3. $4 billion to allow state and local governments to combat the spread of COVID-19 among the existing homeless population and to prevent individuals and families from becoming homeless, including, without limitation, through the provision of temporary emergency shelters by leasing existing property, temporary structures or other means.
  4. $685 million for the Public Housing Operation Fund to provide additional funds for public housing agencies to maintain normal operations.
  5. $275 million for the Federal Buildings Fund to remain available until expended.
  6. Tenants can contact HUD Rental Assistance or their local government.