In what might be seen as a thaw in Congressional relations, a bi-partisan tax bill, with multiple provisions favorable to the horse industry, has now been passed by Congress. Although the bill has now touched down safely, there were a few gusts and swells that threatened its passage right up to the end. President Obama has signaled he will sign it shortly.
The $622 billion bill extends or reinstates multiple tax provisions that have been raised, lowered, or allowed to expire over the last decade. Some have now been made permanent in the new bill; others extended for one or two years; but all are retroactive to January 1, 2015 so horse owners and industry stakeholders can take advantage of them for this year.
The bill, called the Protecting Americans from Tax Hikes Act of 2015, includes several provisions important to the horse industry and championed by the American Horse Council for some time. These benefits include making all race horses depreciable over three years; the ability to immediately expense or write-off up to $500,000 in depreciable business property; and bonus depreciation, which allows the deduction of 50% of the cost of new property purchased and placed in service. All of these provisions apply to horses and other assets used in a horse business.
The bill reinstates the 3-year-depreciation schedule for all race horses for all of 2015 and 2016. “This means that if an owner has begun training or racing a horse this year, or will begin training or racing it next year, the three-year depreciation schedule will apply.
Owners and trainers don’t have to get involved in deciding when to begin training the horse to qualify for the 3-year period, rather than 7 year; it is automatic for all race horses placed in service in 2015 and 2016. The provision allows horse owners to begin training their race horses when they think best and take advantage of the shorter three-year period,” noted American Horse Council president Jay Hickey. “Most horses race over three years, not seven, so this is really a fairer schedule.”
The bill also raises the so-called Section 179 business expense deduction back to $500,000 and makes it permanent, effective January 1, 2015.It had reverted to $25,000 for 2015. This change will allow anyone in the horse business to immediately depreciate up to $500,000 of the cost of any investment in industry assets, including horses, fences, equipment, tack, trucks, etc., purchased and placed in service in 2015 and 2016.
The deduction is still reduced dollar-for-dollar once investments in all one’s business activities hit $2 million.
“The 179 expense deduction is a real stimulus to the $102 billion horse industry and will support thousands of jobs,” said Hickey. “And it applies to all depreciable assets used in the horse business, including horses, be they yearlings, race or show horses, mares, stallions, or breeding shares.”
The bill restores bonus depreciation for qualifying new property, including assets used in the horse business, such as yearlings and other equipment, purchased and placed in service during 2015 through 2019. It had expired for 2015, but is now restored to 50 percent for business property placed in service during 2015, 2016 and 2017.
It then phases down to 40 percent in 2018, and 30 percent in 2019. The first use of the horse or equipment must begin with the taxpayer. Yearlings are eligible for bonus depreciation and new equipment, but not horses like mares or stallions that have raced, shown, or been bred, since they have already been used.
The extender bill would also restore and make permanent favorable tax treatment for land donated for conservation purposes, particularly land donated by farmers and ranchers.
The AHC has been working to have all these provisions increased or reinstated and is pleased they have been acted upon. They have been made retroactive to cover all of 2015. “We had hoped these provisions would have been extended earlier in the year. This would have made planning and decisions to invest in the horse business easier. Congress apparently follows the ‘better late than never schedule’,” said Hickey.
As the national association representing all segments of the horse industry in Washington, D.C., the American Horse Council works daily to represent equine interests and opportunities. Organized in 1969, the AHC promotes and protects the industry by communicating with Congress, federal agencies, the media and the industry on behalf of all horse related interests each and every day.
The AHC is member supported by individuals and organizations representing virtually every facet of the horse world from owners, breeders, veterinarians, farriers, breed registries and horsemen’s associations to horse shows, race tracks, rodeos, commercial suppliers and state horse councils.
Looking to build a new barn or arena? Meet Joseph Martinolich, an extremely talented and experienced equine architect. From Joseph,
“As an architect with over 15 years experience focusing on equine design and farm planning, I wanted to make you aware of my firm and services. I have worked on projects throughout the US as well as internationally on a wide range of projects, from farm masterplanning, stables of all sizes, indoor and exterior arenas, residences, and other farm facilities. I have worked with sport-horse enthusiasts as well as thoroughbred horse farms including Ashford Stud, WinStar Farm, Margaux Farm, Siena Farm, and Tenlane Farm to name a few. Being that your clients are interested in properties that can be used or developed with stables, arenas and other related facilities, they may require and benefit from working with an experienced equine architect.”
This is an amazing video taken of the vineyards at Ferrari-Carano here in Sonoma County. The photographer, M.J. Wickham, took a photo every minute of the day for 365 days and edited it into a time lapse phenomenon! Check it out, it’s gorgeous!
Trying to sell your home on your own means trying to do by yourself what professional REALTORS™ do every day. Obviously we are a little biased about this but before you go to Staples and buy a ‘For Sale’ sign, think about this:
Professional REALTORS™ know how to:
Price & position your property in the marketplace
Professionally market your home online, direct to buyers and extensively to the network of local real estate professionals
Manage showings, meet buyers, conduct open houses
Handle paperwork, disclosures and other legal issues
Help potential buyers obtain financing
Why do sellers try to go it alone?
49% of sellers who sold their own home say they “did not want to pay a commission”. Most assume that they will put that money in their own pocket. However the buyers of FSBOs say they expect to be able to put that money into their pocket!
26% sold their home to a friend or relative
11% were contacted directly by a buyer
4% did not want to deal with an agent
Selling your own home usually does not result in the best price:
The median selling price of FSBO homes was $172,000 compared with $215,000 for agent-assisted home sales
Sellers who “did it themselves” realized a 20% lower sales price!
Owners are not (Real Estate) marketing professionals.
They frequently use the least effective and most costly methods to attract buyers, including:
44% relied upon yard signs
22% placed newspaper ads
15% effectively conducted open houses
3% had the ability to send direct mail to a database of prospective buyers
Other Downsides of FSBO
Most FSBOs are not prepared for the complexities of the real estate transaction. As a result, they often lose potential buyers and valuable market time.
They may also face certain risks with respect to paperwork and legal issues. Only 15% said they understood the paperwork involved.
They may leave money on the table or fail to sell by inappropriate pricing. Only 15% said they were able to set the right price in the marketplace.
They may waste time with unqualified buyers or lose those who could qualify. Only 5% could help buyers obtain financing.
Time is NOT of the Essence! Only 13% said they sold within the length of time they had planned on and 5% said they had enough time to devote to all aspects of the sale.
So, if you’re going to make 20% less money,
take ALL the legal liability and risk on yourself,
be overwhelmed by the amount of work required AND
do a poor job to boot, why would you do it?
Call us for a fresh breath of professional consultancy.
We can lead you through the process, get you top dollar and save you time, money and heartache. After all, your home is probably your largest single investment, why would you trust that to an amateur?
Source: 2009 Profile of Buyers and Sellers, NAR Research
People often ask how they should hold title to their property… this is an important question so read what the experts have to say about it. This information kindly provided by Cornerstone Title Company.
Several years ago, a group of the top selling REALTORS® who work the luxury end of the Sonoma County real estate market, formed a new networking group. These 17 agents sell most of the Sonoma County real estate over $2 million. I am pleased to be a founding member of this group and to be able to offer specific benefits to my clients who are buying or selling luxury property.
Once a month, we tour, as a group, all the new properties we’ve listed in this price range. Each of us prepares a detailed feedback sheet to share our views about how the property shows and is priced, this is for the benefit of the listing agent as their client. In particular, we make constructive suggestions about staging, presentation, marketing and price strategies. It’s a great way to take advantage of our collective experience, expose our listings to all the top agents at once and recruit ‘ambassadors’ for our properties so that when they return to their respective offices, they tell other agents with clients looking in this price range, about my listings.
These agents represent Compass (the number one brokerage in Sonoma County for the $1 million plus market), Sotheby’s, Legend, Coldwell Banker and Keller Williams.
I’ll be touring properties with the group on the second Tuesday of every month. If you ever have questions about this market or any of the listings in this price range, I can offer you quite a bit of information on the subject! If you are considering listing your luxury property, allow me to explain the unique benefits I can offer you as a member of this group.
I routinely attend courses on the planning and permit process in Sonoma County. It’s a fact that many people really don’t know how to respond when contacted by the county about a possible code violation. So I thought I’d share the following…
You do NOT have to allow the county access to your property. If they can see the violation from the road or from Google Maps, then they probably have evidence. If it’s inside your home, you do not have to allow them access.
If you receive a threatening letter suggesting you have violations on your property… do not offer or volunteer any information. Make sure you understand what they are asking, ask what evidence they have to support this. You do not have to respond immediately. Find out what your options are before responding.
Good planning and permit consultants are available who can help you find a resolution at the lowest possible cost and/or effort. It’s almost always worth the price of a consultation to find out if they can help you.
It is important to know what the permit status is on your property. When the time comes to sell it, a buyer will find out if there are any ‘red-tag’ violations; you will have to disclose everything you know and in some cases, permit violations make the property ‘un-lendable’ which dramatically impacts the price. So if you have code violations, now is the time to resolve them, not when you’re trying to sell your property.
Any of course my last piece of free advice… never do any improvements without the necessary permits. When the time comes to sell your property, the buyer will rarely value the improvements at anything close to what they would be worth if they were permitted and often banks will not lend on the property if there are non-permitted units, etc.
For more information on things to do BEFORE you decide to sell your home, please feel free to contact me!
If you need to move out of your primary residence and want to hold it as a rental property, then that might be a
great strategy right now.
I REALLY like the idea of liquidating investment property and rolling it over into a home that you might like to retire to in future. You can thus defer your capital gains, and as this article describes, purchase your future retirement home, rent it out for 2+ years to enable it to meet the investment property definition for your 1031 exchange and then potentially move into it in your retirement, essentially converting it into your primary residence.
As you know, REALTORS can’t give you tax or legal advice, only a tax professional can do this. So you should consult one to ask how this might apply to your personal situation. If you decide it’s helpful… then I’m ready to go to work to help you find that perfect retirement home.
Sonoma County truly is still ‘ON SALE’ and our prices are better than we expect to see again. Take advantage of our wonderful market, terrific interest rates (down to almost 3%!), lock in at a lower property tax base and buy your future retirement home now! We have a strong rental market here and I think this all could combine to create ‘The Perfect Storm’ for your retirement and tax planning.
If you’d like a Sonoma County property expert to help with your property search, to find your dream country property or to sell one, contact us for a consultation!