Land tax policies

Readers might take a look at the two presidential campaign websites to see which candidate appears to understand land issues best (or if at all).

Tax policy is often used by the government to discourage and encourage certain behaviors. How each of us defines the best interest of the country determines what our tax-policy preferences are.

But as a general exercise in seeing what we think, what are your opinions on the following “land issues,” as they relate to tax policies:

1.  Capital gains rate for small (say under $2 million) land investments? Lower, higher, same?

2.  Capital gains rate for large land investments? Lower, higher, same?

3.  Do more, less, or same to help second-home ownership?

4.  More generous, less generous, or same federal tax benefits for conservation-easement donation?

5.  Make it easier for individuals to put retirement savings into land through an IRA and other vehicles?

6.  Should certain types of land improvements be expensed rather than depreciated? Is there a public benefit to that position?

7.  Should the dealer tax policy be relaxed, stay the same, or tightened?

8.  Should division be encouraged, discouraged, or left alone? What types of division?

9.  Should 1031 rules be changed to allow/promote deliberate sequential exchanges?

10. Is there a public interest in promoting small-farm ownership and production that would justify tax incentives for such owners and their production?

11. With the backout of timbering on public lands, should tax incentives be offered to private landowners to mangage woods for timber production and provide a break on timber-derived taxable gain?

12. Should building and use restrictions on floodplain, critical habitat (for endangered species) and wetlands be considered a taking and therefore made eligible for tax assistance?

Other ideas? For and against.

FEMA’s new floodplain maps

Last year, FEMA issued new floodplain maps. Generally speaking, it appears that floodplains have been enlarged.

What’s been the consequences of the new maps?

Harder to get mortgages or refis for structures now included in floodplain?

Insurance premium increases of structures now included?

Harder to sell such properties?

Other?

Benefits?

What are your thoughts?

Asking-price discount for conservation easements

Conservation easements vary a lot, although all are supposed to serve some public interest.

Some are sold, but most are donated. They are usually sold or donated in perpetuity, though some have limited terms. Most easements are set up to preserve open space, restrict/eliminate development or keep farmland in agricultural use.

At the time of the donation, its value is calculated. The donor uses the value to receive, federal, state, local (property tax) and estate tax benefits. These are substantial.

The question I have is how should a buyer calculate the discounted value of a for-sale property burdened with a conservation easement?

Many sellers seem to think that a CE is a selling point and don’t like to discount their asking prices.

It’s often hard to find comps to use in a conventional appraisal.

I’ve been involved in several situations of this sort. It’s hard to agree on a valuation methodology.

What are your thoughts?

Floodplain buyout: Maybe it’s time to stop rebuilding

My heart — that mean-spirited little pump I keep around for “Casablanca” and odd emotional assignments — hurts for the Midwest folks who have been wiped out by flooding, once again.

Three to four million acres were under water. About 2 million acres will not be planted. Twenty-four lives have been lost; property in the billions has been damaged or destroyed.

The full economic impact will come into focus several years from now when all the damage, lost wages and lost sales are tallied against the money coming in from disaster aid and dollars spent rebuilding.

In 1993, Midwest flood damage came to $23 billion. It’s tough getting kicked in the teeth again and again.

My little valley below Snowy Mountain has cleaned up after three 100-year floods during the last 25 years. In the upper Potomac River watershed, we, too, have lost lives and homes. Read more »

Property auctions are going, going…going stronger than ever

While large American newspapers are losing readers, cutting staff and scraping by on fewer advertising dollars, they’re expanding in one area–notices of property sales.

These fruits of foreclosures hang heavy in the back pages.

Distressed properties — the growth sector of a troubled economy — are often sold at auction.

Almost $60 billion of property was auctioned last year, and the National

Association of Realtors predicts about 30 percent of all real estate will be auctioned in 2010.

Individual states regulate auctions and auctioneers, but standards vary.  About half have enacted auction and auctioneer licensing statutes, according to Steven L. Good, author and Chairman and CEO of Sheldon Good & Company.

The National Auctioneers Association has posted its Code of Ethics at www.auctioneers.org. Read more »

Hey, Hey. Ho, Ho. Fabulous has got to go!

Words mean as much in selling real estate as they do in selling a Presidential candidate. Every campaign — whether in politics or property — spins its words to feature its candidate’s assets and redecorate the liabilities.

Often, the best tactic for selling anything is to tell the customer: Don’t look at this; look at that. “Sure, this pickup truck only gets eight miles to the gallon, but you won’t find a redder paint job this side of Beijing, and those cupholders…they’re the best in our weight class!”

As I read the real-estate classifieds on Sunday, I was struck by the number of properties that were awesome, beautiful, breath-taking, charming, elegant, exciting, extraordinary, fabulous, gracious, great, ideal, incredible, lovely, luxurious, magazine-incredible, magnificent, must-see-to-believe, one-of-a-kind, picturesque, pristine, private, spectacular, stunning, superb and terrific. Read more »

Coping with high gas and diesel prices

I have some friends who are loggers/truckers. They’re getting killed. The wood they haul–particularly the low-grade stuff and pulp — doesn’t pay for itself these days.

What’s an alternative?

Komatsu had worked up an electric hybrid excavator–a big hoe. United Technologies has a fuel cell that its using in buses. Both could work on dozers, trackhoes, skidders, I’m thinking.

Is there a hybrid electric dozer available? Is there a hybrid-electric farm tractor?

Has anyone had experience with the hybrid-diesels that Volvo and the other big manufacturers have put on the market?

What are your thoughts?

Appraising a property with no comps

My wife and I live in a county with 2,500 full-time residents. We have a lot of cattle, sheep and trees. The county seat is a town of about 200.

Melissa is one of two lawyers in the county. This is one of our county’s major cools.

She recently bought a 90-year-old house to use as her office. It’s a simple two-story, two-over-two design with an enclosed back porch. She paid a little over $90,000 and put $50,000 into the conversion. Many of the renovations were specifically done to accommodate her clients and her law practice–extending the porch and making it handicap-accessible was about $10,000 alone. She moved the kitchen from one of the two large rooms downstairs back into one of the two small rooms in the enclosed porch. It’s a serviceable kitchen for an office, but too tight and unwieldy for a residence. The former kitchen/dining room area is now the legal secretary’s office. All of the wiring was replaced, made computer capable. All of the phone system was replaced to handle office lines and Internet service. Parking area, lighting, security measures, shelves, painting, floor refinishing, plumbing etc.–most of the money went for office-related purposes, not aesthetics. Had she bought it for a residence, no money would have been needed. Read more »

Sooner or later, we will change

Sooner or later — words I use a lot — gasoline in America will cost $8 per gallon. Which is what it costs today in Europe.

“Sooner or later” lends me a little erudition, which I don’t deserve, because whatever follows usually comes true. Not always, but often enough.

Eight-dollar gas is likely to happen, because the world’s population is growing and most of us will use more energy than before. The wealthier we are, the more energy — particularly, petroleum products — we consume. Countries that were low-petroleum consumers on a per-capita basis in the past — India, China, Saudi Arabia and others — are increasing their use.

At the same time, oil production is not keeping pace. Despite a 57 percent increase in price last year, the world’s 15 largest oil exporters — who make up about 45 percent of all supply — shipped 2.5 percent less, according to the U.S. Department of Energy.

When price goes up, supply is supposed to go up. So why isn’t oil supply going up? Read more »