Tag: real estate tax

Is the Mobile Home Part of the Real Estate?

A traditional dwelling house built onto a foundation or basement is part of the real estate and will transfer over by deed. However, a manufactured, mobile, or modular home built somewhere else and moved on-site may not automatically be transferred.

So, what are the differences between Manufactured/Mobile Homes and Modular Homes?

A manufactured, or what used to be called a mobile home, has the following specifications:
1. A structure which is built to the HUD code
2. Transportable in sections
3. Dimensions of 8’W x 40’L and 320+ sq. ft. or greater
4. Built on permanent chassis
5. Designed to be a dwelling
6. Can be attached to a permanent foundation
7. Certified by its manufacturer, evidenced by labels on the home
8. Has a title and owner pays personal property taxes

A modular home has somewhat different features:
1. Built in sections in a factory
2. Pieced together at building site
3. Cannot be moved from its foundation
4. Becomes real estate once attached to the foundation

Why Should We Care?

If you are getting financing, the bank will need to know whether or not the home is attached, since it affects what type of mortgage they can offer you. If the home is part of the real estate, a mortgage will secure it. However, if the home is personal property, such as a trailer, the mortgage is on the real estate. There would be a perfected security interest on the trailer, in the same manner as on a vehicle.

How do you convert a Manufactured or Mobile Home to Real Property?

You complete an Affidavit to confirm that the home has been permanently attached. This form is also the formal application to eliminate the title. Send the filled-out form to our office along with the original title. All liens and taxes on the home must be paid in full. We will then send the documents to the appropriate offices for approval. The title is considered eliminated when the affidavit form has been recorded in the Register of Deed’s office in the county in which the manufactured or mobile home is affixed.

What if the title can’t be found?

If the owner does not have a title for the manufactured or mobile home, he or she will need to obtain the title before selling the home. An owner of a manufactured or mobile home with a model year of 1979 or older may execute certain documents to establish ownership. If the manufactured or mobile home is a model year 1980 or newer, a quiet title suit will be needed in order to obtain title.

Though the process might sound a bit complicated, it doesn’t have to stress you out. Tallgrass Title has experience with the issues surrounding these prefabricated homes. Give us a call today to get the assistance you need!

IRS Tax Scam Phone Calls

It’s that time again! Tax Season!  With tax season, come the tax scammers.  Starting in late January and early February, these are the calls that go something like this:

This is the IRS. We are contacting you regarding money you owe to the IRS.  If this money is not paid within 24 hours, a warrant for your arrest will be issued.  To avoid any further legal action please call xxx-xxx-xxxx. 

Holy cow! That is panic inducing, but do not fear, it is only a scam! Here are some clues that it is not really the IRS.

*The IRS will NOT:

  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand tax payment and not allow you to question or appeal the amount you owe.
  • Require that you pay your taxes a certain way. For example, demand that you pay with a prepaid debit card.
  • Ask for your credit or debit card numbers over the phone.
  • Threaten to bring in local police or other agencies to arrest you without paying.
  • Threaten you with a lawsuit.

The IRS will not call you if you owe them money. They will send you notice after notice regarding what you owe, and they will send it through the United States Postal Service a/k/a regular mail.  They will not email, call, fax, or use any other type of technological service. They will send it through good old-fashioned mail.

Their notices will include not only how much you owe, but where the discrepancy was, and how they calculated any interest or late fees. They will not just throw a number at you and expect you to take their word for it.  They give evidence and hard numbers to back up their claim, and they give you, the tax payer, a chance to appeal the claim or question the amount owed.

So, if you are on the receiving end of one of these scams, do not panic. Take a deep breath. Take note of their phone number. Get the spelling of their name (it may be a fake name), and hang up the phone. You can then notify your tax preparer, and/or you can contact the Treasury Inspector General for Tax Administration.  You should also report it to the Federal Trade Commission.

Contact the TIGTA at the “IRS Impersonation Scam Reporting” web page

Or

Contact the FTC at the “FTC Complaint Assistant” on FTC.gov.  Please add “IRS Telephone Scam” to the comments of your report.

Taxes are stressful enough. Do not add to your stress this year by worrying about coming up with money to pay off the IRS scammers. Just keep telling yourself;

The IRS will not call and threaten me! 

*This information was taken directly from https://www.irs.gov/newsroom/scam-calls-and-emails-using-irs-as-bait-persist. Check it out for more information regarding Tax Telephone and Phishing scams! 

For additional information check out this IRS YouTube video.

Using a Power of Attorney in Real Estate Transactions

In the current, fast-paced world, people often times find it difficult to be present at a closing. Perhaps a work or vacation schedule prevents a person from being present at a real estate transaction.  Military personnel are often times deployed overseas.  Often times folks are forced to relocate quickly and must sell their house from afar.  For these and many other reasons, a power of attorney may be the right tool for a closing.

Simply put, a power of attorney is a document that gives a person the authority to do certain acts on your behalf. This person is often referred to as the “power of attorney” or “agent.”  In a real estate transaction, this is commonly done with a “limited power of attorney.”  This allows the designated person the limited authority to sell or purchase real estate on behalf of a person.  The power of attorney document is signed by the person giving the authority prior to the real estate closing.  The designated individual provides the document to the title insurance or closing agent.  At the closing, the power of attorney simply signs for the absent person.

However, it is important to remember a couple of points to avoid delays or confusion at the closing:

  • Plan on having the power of attorney prepared well before closing. Often times the individual signing the document will be overseas. This will require finding a notary or equivalent at a consulate’s office. If in the United States, but simply unavailable, a notary will need to sign the initial power of attorney. Also, an original power of attorney will be needed for the closing.
  • Let your real estate agent, title insurance agent, closing agent or banker know as soon as possible that you are using a power of attorney to close. It is extremely important that these individuals know about the presence of the power of attorney in order to prepare the closing correctly. Failure to let these individuals know of that fact could delay closing.
  • If the power of attorney is being used to sell a principal residence or “homestead,” Kansas law dictates that specific language be added to the power of attorney. If the language is not present, the power of attorney may lack the proper authority to complete the closing.
  • Have a real estate professional assist you with the form. The power of attorney document and its requirements can often appear daunting and confusing. A real estate professional can assure that the document is completed correctly and prevent a delay in closing.
  • Decide who will be your power of attorney. Often times this is a stateside spouse, real estate agent or family member. It is important that this person be trustworthy. After all, the family home is most Americans’ largest investment. You do not want just anybody handling this transaction for you.

 

Tallgrass Title is also happy to assist in the preparation of the power of attorney to ease the closing process. Our office has seasoned real estate attorneys on staff that have prepared countless power of attorney documents for every type of real estate transaction.   Additionally, our attorneys are available to answer questions regarding the power of attorney.  With a little pre-planning, a seemingly daunting and confusing situation can be made easy.

Tax Consequences Resulting from the Sale of Your Principal Residence

It has often been said that there are two certainties in the world: death and taxes. However, with the sale of your principal residence, most of the time a seller can avoid paying tax on the proceeds received!  So, you have decided to sell your house and are concerned with paying income tax on the proceeds?  Are you about to attend your closing and this thought just popped into your head? Did you just deposit your proceeds check and now are scared the IRS will be coming for your bank account?

Simply put, the IRS requires individuals to pay capital gains tax on “gain” or money made in a transaction. This means that you will be taxed on the difference between what you paid for real estate and the sales price.  So, if you paid $100,000 for a house and sold it for $150,000 you have “gain” in the amount of $50,000.  Therefore, this $50,000 would be subject to tax.  However, the IRS has a law that states that if you sell your principal residence for a gain and you have had the house for at least two years, you can exclude up to $250,000 in gain from tax.  If you are married, the level is $500,000 in gain.  So, a couple selling their qualifying principal residence can take up to a half a million in profit without having to pay a single penny in tax!

With this advantageous tax rule, several people have attempted to use this rule for property that is not necessarily a principal residence. So, what is a principal residence?  Several tests are used to determine whether your house is a principal residence and subject to this tax free sale allowance.  Some of the factors used are: Where are you registered to vote?  Where do you receive your mail? What school district do your kids attend? What address is on your driver’s license? What address is on your state and federal income tax returns?  How often do you stay the night at the house?  The list is not inclusive but are definite factors looked at by the IRS.

Additionally, one must reside in the house as a principal residence for at least two years out of the previous five years in order to qualify for the exclusion. However, if the sale was because of a few reasons, you may still be able to qualify for at least a portion of the exclusion.  Some of the special exceptions include: work related move, health related move, divorce or unforeseeable events.  These exceptions each have their own rules that are too extensive to discuss here.  Therefore it is best to consult with your tax preparer or a qualified tax professional.

As you can see, this exclusion is a powerful tool for homeowners!

Real Estate Tax Proration in Real Estate Closings

A common question that arises during the closing process is how a real estate tax proration works in Kansas. Every county in Kansas, including Pottawatomie, Wabaunsee and Riley Counties, has a tax levied against real estate.  It is based upon the value of the property owned by an individual.  There are also different tax rates for residential, commercial and agricultural real estate.  Taxes are due for each year a person owns real estate and are charged against the owner of the real estate at the time the tax becomes due.  In Kansas, real estate taxes are not due until the month of December of the year of the accrued tax.  Additionally, the actual amount of tax is also not known until shortly before the tax is owed. So, basically, that year’s taxes are always paid at the end of the year in December.  To add further confusion, an owner of real estate may pay all the tax owed for that year in December or can pay one-half of the tax in December and pay the second half in May of the next year.

So, if you close a real estate transaction on any day besides January 1, the Seller will have occupied the real estate for a portion of the tax year and the Buyer will occupy for a portion of the tax year.  Therefore, to be fair, the Seller pays for the portion of the taxes that accrued while he occupied the real estate and the Buyer for his portion.  However, the actual tax amount is not known until around December, right?  If a transaction closes in July, how do we charge each side its amount?  As real estate taxes are based on value and value typically does not fluctuate wildly year to year, we estimate the amount of the taxes for that year based upon the previous year’s real estate taxes owed.  If your closing takes place when taxes are known, we will use the actual real estate tax figures from the county for that year.

Lastly, real estate taxes for that year cannot be paid until they come due in December.  Therefore, the Seller pays the Buyer the Seller’s portion of the taxes at the closing table.  The Buyer is then responsible for all of the taxes when they come due.  To simplify the process even further, we usually just show this as a credit at the closing table.  Meaning, we reduce the purchase price to be paid to the Seller by the Buyer by the amount of the real estate taxes that are the responsibility of the Seller.

Real estate taxes in Kansas can be quite confusing.  Therefore, if you have additional questions about real estate taxes in your closing, simply call our office for further assistance.  That’s why we are here!