News About Properties

Bankrupt condo – hotel reflects downturn

Aug Funding lent the owners of the St. Augustine condo-hotel $5 million in late 2005 and hoped to be paid off with interest by now.

But its attempt to auction off the 24-room South Beach hotel failed, despite more than 100 inquiries.

”Nobody showed up,” said Phillip Hudson III, head of the Florida bankruptcy practice at Arnstein & Lehr and the St. Augustine developers’ lawyer. On Friday, the fund bought the hotel in bankruptcy proceedings.

The dud of a fire sale offers another measure of a once-hot corner of South Florida’s real estate market. When condominium sales were soaring, dozens of hotels offered their rooms for sale to individuals, who could then rent out their units for a share of the profits. But as the condominium market went cold — sales were down 35 percent in April across South Florida — the condo-hotel sector slowed down, too.

Champion for homeless now faces own housing woes

Westgate Tabernacle Pastor Alan Clapsaddle has fought for his church’s right to house the homeless and worked to find them a more permanent place to live, but he’s nearly lost that battle personally.

The home he and his wife, Kim Guzma, owned is no longer theirs and he is in a sea of debt that continues to grow.

During the past two years, the former chef with a talent for chocolate creme brulée was subject to two foreclosures and a $9,831 lien from the IRS.

Even after selling the home during the winter, Clapsaddle has outstanding debts exceeding $50,000, according to Palm Beach County court documents.

As Condos Rise in Florida, Investors Try to Flee

As dozens of condominium towers conceived during Florida’s real estate boom near completion, investors who snatched up units in the preconstruction phase in hopes of turning a quick profit are increasingly trying to break contracts, even walking away from fat deposits.

“Motivated” sellers are flooding online forums like Craigslist with advertisements for condo units still months or years from being finished. And lawyers have been inundated with calls from people hoping to avoid closing on units they bought during the speculative craze of 2004 and 2005.

“I get two or three of these calls a day,” said James Ryan, a lawyer in Boca Raton who said he had 40 clients looking to get out of condo contracts. One, Mr. Ryan said, abandoned a $340,000 deposit rather than close on a $1.6 million unit that lost its appeal as the market faltered.

The numbers suggest that it will only get worse. In Miami-Dade County alone, 8,000 new condo units will be completed this year and nearly 12,000 more in 2008.

No profit doesn’t mean no taxes

DEAR BOB: I bought a rental property in 1991, which I sold for $450,000. To avoid capital gain tax, I used an Internal Revenue Code 1031 tax-deferred exchange to buy another rental property for $450,000. After renting it for 12 months, I moved in and have lived in it for 24 months. If I sell this property at the same $450,000 price, will I owe any capital gain tax since I made no profit? Is this a good way to avoid capital gain tax? –Sim Y.

DEAR SIM: Nice try! But Uncle Sam is way ahead of you.

Your adjusted-cost basis for the $450,000 rental house you acquired in the Internal Revenue Code 1031 tax-deferred exchange was not $450,000.

Instead, it was your $450,000 purchase price minus the deferred capital gain on your old rental property minus the depreciation you deducted on the acquired property during the 12-month rental period before you moved in to make it your principal residence.

Retirement interrupted

One couple mapped out their retirement, but the plan hinged on being able to flip Florida real estate. Oops. Time for Plan B.

Walking along a pier in Daytona Beach with their youngest grandson on a recent Saturday afternoon, Steve and Carol Daimler stopped to see what fish the locals were catching. The fishermen wowed 10-year-old David with a big flounder they’d just landed and photos of a 500-pound, nine-foot shark they’d once caught.

After a day spent playing miniature golf, eating homemade ice cream and splashing around in his grandparents’ in-ground pool, David declared, “This is the best day of my life.”

Such perfect afternoons are exactly what Steve, 61, and Carol, 60, had in mind when they retired to Florida from Virginia two years ago. But those days are rare. Instead, the Daimlers spend most of their time consumed with selling two investment properties they bought shortly after the move – holding open houses, distributing fliers, cold-calling realtors and catering to prospective buyers.

Investors in realty exchanges seek relief

Appeal to avoid paying taxes on money that vanished.

Hundreds of investors – some who lost millions after the collapse of a firm specializing in tax-deferred real estate deals – are seeking relief from the Internal Revenue Service to avoid paying taxes on money that has disappeared.

Many are Bay Area residents who entrusted their money to 1031 Advance in San Jose, a subsidiary of the Richmond, Va.-based 1031 Tax Group that filed for bankruptcy in New York City this month.

Attorneys hired by several investors and a trade organization said Monday they have asked the IRS to lift the rigid 180-day rule that governs the buying and selling of property in transactions known as 1031 exchanges.