April 2005:. the Tax Tidbits issue ...
Tax Benefits for Homeowners
People are buying commercial properties. In 2004, cross the country, a record $8.6 billion worth of office buildings, retail centers, warehouses and apartments were sold. That’s close to double what was spent in 2003, notes a report by Deloitte & Touche and Rosen Consulting Group

More properties are selling, and people are paying top dollar for them. In 2004 in Los Angeles, the average price per foot paid for office buildings rose to $196, up from $156 in 2003.

Interest rates have been low. Until recently, the stock market has not been inspiring. Real estate prices have been bounding up at record levels. Not only has investing in real estate seemed like a sucker’s bet, this investment also comes with considerable tax breaks. That’s why more people have been investing in real estate.

As far as what to invest in, some go for income producing properties, others retirement homes. According to a study by the National Association of Realtors, between 1992 and 2002, annual sales of second homes grew by 36 percent. American Demographics Magazine forecasts that the market will grow nearly 50 percent by 2010.
But in this world, nothing is certain but death and taxes."
                                        -- ”Benjamin Franklin, 1789

Paying taxes is part of being an American — life, liberty, the pursuit of happiness and the need for government taxation. The government is kind to homeowners, giving mortgage-yielding citizens tax deductions that are not available to renters. If you own a home or are thinking about buying or selling, there are pages of deductions
Gateway to new Playa Vista development
M-2 zoning
5826 - 6826 S Centinela Ave - Culver City, CA

Offices, shopping centers, industrial buildings and apartments were all hot ticket properties around Los Angeles in 2004. Investment dollars, inspired by continued low interest rates, and a growing perception of property as a safe alternative to the stock market, piloted the commercial property investment market to new heights last year.

Check out these figures: Commercial property buyers spent more than $4.2 billion on office buildings in LA County last year, according to Cushman & Wakefield Global Real Estate Services. That’s 6 percent more than 2003, and double the 2001 figure.

There have been gobs and gobs of money thrown at real estate, confirms Nicolas Buss of PNC Real Estate Finance.

Sales are up, prices are up. The Los Angeles Times reports that the average price per foot for office buildings rose to $196 in 2004, up from $156 in 2003.

Meanwhile, prices downtown hit $350 a foot in 2004. Sale prices are above $400 per square foot in downtown Santa Monica.

A member of the Action Apartment Association in Santa Monica called downtown, "A real sucker's bet. Market conditions don't justify the higher prices."

Office vacancy rates in downtown Los Angeles fell 2 percent to 17.3 percent in the third quarter 2004, but that's still well above the 10 percent level that the office building rental experts consider equilibrium. Around the county, vacancy rates came down 2 percentage points to 15.5 percent. The decline in vacancy rates didn't boost office rents, which continue to be flat throughout LA County.

Great Room Retail in West L.A. + Sign Income
Downtown Santa Monica - Amazing Location!
521 Montana Ave in Santa Monica
963 N Wilton Pl, Los Angeles
Shopping Mall Adjacent Commercial Property
shopping Center With A View

The Internal Revenue Service has an intriguing new gift for property owners, an evolution of tax code sections 1031 and 121. New guidelines have been adopted allowing investors who move and use their old home as a rental property to eventually "buy down" and take cash out of the deal without facing federal income tax liability. This is an amazingly progressive step by the IRS because this money - known as "boot" in tax circles - had previously been taxed.

The "like-kind" exchange rules of IRS Section 1031 allow individuals and corporations to trade in existing business and investment property for new property of equal or greater value -- and defer the capital gains tax along the way.

IRS code Section 121 lets you exclude $250,000 of gain if you file a single-return and up to $500,000 excluded if you file a joint-return when you sell your personal residence if you have lived there for two of the last five years.

"For the first time, the IRS is allowing taxpayers to mix the rules on principal residences and investment property," notes Rob Keasal, accountant and real estate tax specialist. "The new rules do not apply to all 1031 exchanges, only those that feature the use of a taxpayer's former primary residence."

What gives this new guideline so much appeal is that for the first time, taxpayers are allowed to take cash tax-free out of a property exchange. The new rule is retroactive to Jan. 27, 2005.

The new primary home-investment possibility provided by the IRS that includes depreciation deductions goes something like this…

Starry Starry Night by day
Venice - March 2005
The recent survey by Goodwin Simon Strategic Research found that 45 percent of the 400 residents polled in the City of Santa Monica named homelessness as the top issue facing the city.

The 2005 statistic of 45 percent being bothered by homelessness is up from 33 percent three years ago. Santa Monica residents felt far stronger about homelessness than traffic, which was cited by 25 percent of the respondents (up from 18 percent in 2002), and