John D. Teter Law Offices



1361 South Winchester Boulevard, Suite 113
San Jose, CA 95128
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San Jose tax deduction lawyer real estateUnder the Tax Cuts and Jobs Acts of 2017, certain owners of rental properties may be eligible for a significant tax deduction. The law allows for a 20 percent deduction against “qualified” business income for pass-through businesses. In determining whether someone qualifies for this deduction, a key consideration is whether the taxpayer engages in a “qualified trade or business” for purposes of Section 199A of the Internal Revenue Code. In some cases, it can be difficult to determine whether a business meets these qualifications, and the IRS has issued additional guidance about safe harbor for rental real estate businesses.

Qualifying for Safe Harbor

According to the IRS, the 20% qualified business income (QBI) deduction can only be taken against business income, rather than real estate investments. To achieve the required classification as a qualified trade or business, the IRS has set forth two major requirements for owners of rental real estate.

First, real estate property must be directly owned by an individual taxpayer or by an eligible pass-through entity. Second, the taxpayer must document 250 hours of rental services each year. Rental services encompass numerous activities, such as arranging advertising, collecting rent, supervising employees, and performing maintenance. Such activities that are performed directly by the owner or by an employee, agent, or independent contractor on behalf of the business will count toward the 250-hour requirement.  


On April 4, 2016, at the National Low Income Housing Coalition Policy Forum, the United States Secretary of Housing and Urban Development Julián Castro announced, "HUD will use the full force of the law to protect the fair housing rights of folks who've been arrested or who're returning to their communities after serving time in jail or prison."

Roughly 100 million adults in the United States have a criminal record. That is about a third of the population and Castro identifies Black and Latinos being arrested at disproportionately higher levels as unfair. He cites statistics that while drug use is consistent across the population, brown and black people are more likely to be arrested for drug violations. This is a new interpretation of real estate law.

Castro believes many landlords instantly and without thought refuse to rent to criminals and those with an arrest record, no matter how long ago the conviction, and disproportionately affecting millions of people of color without good cause. The Federal government seeks to end this practice.

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As the foreclosure bubble wheezes out its last bit of hot air, the courts and tax collectors are no longer borrower friendly or sympathetic in regards to hardships and distressed markets. The dockets are backlogged and the various tax administrations are seeking relief for the debts owed and collateralized by real property.

Asset managers will advise borrowers to work with their attorneys and attempt to mitigate the loss as much as possible. Alternative methods include escrow analysis, loan modifications, repayment agreements, Short Sales, and the Deed in Lieu.

In cases of default each circumstance warrants individual review. If the loan has only been deemed as " nonperforming " for a short time, an escrow analysis should be conducted to evaluate any surplus or shortage being held for the payment of taxes and/or insurance. These funds can be recalculated or reapplied when restructuring the loan. A loan modification or repayment agreement is ideal for this type of defaulted borrower. Being proactive about the situation and working diligently to become current on the payments goes a long way with your lender, while sheltering you from litigation and credit risk.

Tagged in: Real Estate

When you're getting ready to buy a home, you may hear terms thrown at you such as "title" and "property deed", and wonder what the difference between the two are. In real estate law, the title is a legal term that means ownership, while the property deed is the document that transfers the title from one party to another.

In regards to the title, it may be partial or full, meaning that other parties could have rights to the property, including the right to access the property, use it and transfer it either in whole or in part to another party. People can take title to a piece of property in many different forms, including joint ownership and tenants by the entirety.

The property deed is the legal document that transfers the title between parties. Under the Statute of Fraud, the deed must be in written form in order to be enforceable. The deed is filed with the official registrar of deeds in the municipality the property is located in . Deeds are also issued in other circumstances when the property is transferred , such as an executor's deed, which is issued by the executor of an estate selling property owned by the estate, or a tax deed, where the property is sold for the payment of unpaid taxes.

Tagged in: Real Estate

Real estate law is complex, and a home sale is often intimidating. Some states require the use of an attorney, while others leave it up to the buyer and seller to decide. Your typical agent will tell you most transactions are straightforward and, if not required by law, there is no need. Is this true?

The simple fact is a real estate licensee, while they can help walk you through the sale process and fill-in the blanks of a pre-written sales agreement, is not a law expert. They have neither the ability nor right to give their clients legal advice. Unless they are also an attorney, the typical real estate agent cannot answer any legal questions, from contract law to zoning issues.

One of the greatest benefits of using an attorney, specializing in real estate law, is protecting you from financial loss. The sale agreements used by real estate agents are fill-in the blank, covering only the most common, generic issues. All real estate transactions are unique, and there is no guarantee that a generic contract will protect you. Don't you agree?

Tagged in: Real Estate
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