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All REALTORS® have until December 31, 2016 to complete Cycle 4 Code of Ethics.  Why not get a head start and earn 2 CE credits!
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Terrorism Risk Insurance Act Reauthorization
Unless Congress takes action, the “Terrorism Risk Insurance Act of 2002,” (TRIA) expires at the end of 2014. TRIA created a federal reinsurance program following the September 11, 2001 terrorist attacks, allowing private terrorism insurance to be both available and affordable. By providing a “backstop,” TRIA allows more insurers, including smaller companies, to offer terrorism insurance, keeping costs affordable and coverage available. According to the Congressional Budget Office, this comes at no cost to taxpayers.
Terrorism insurance is important to commercial financing: many lenders and investors require it to finance construction of large projects, especially in “high risk” areas. If the program expires, insurers may exclude it from property coverage to manage risk aggregations in concentrated areas. It is also an important structural protection in the Commercial Mortgage-Backed Securities (CMBS) market. Without it, some firms may decline to rate or cap their ratings on CMBS transactions.
Several bills have been introduced in the House to renew TRIA, and the Senate introduced one in early April; the next step will be a bill from the House Financial Services Committee, followed by markup hearings in May and possible passage of a reauthorization measure as early as this summer.
NAR participates in the Coalition to Insure Against Terrorism (CIAT), and has met with many key offices in the House and Senate regarding TRIA reauthorization. NAR has also communicated with both the House Financial Services and the Senate Banking Committees in advance of their hearings on the topic, stressing the importance of TRIA to commercial real estate.
Section 1031 Like-Kind Exchanges
“Like-kind exchanges” under Section 1031 of the Internal Revenue Code allow property owners to defer taxes on gains realized from the sale of “like-kind” real property until a future date. This provision is under threat by the current spate of tax reform proposals – in their discussion drafts, Senator Baucus, former Chairman of the Senate Finance Committee, proposed repealing it, as did Chairman Camp of the House Ways and Means Committee, and the President’s proposal suggests capping it at $1 million.
Like-kind exchanges allow people who otherwise would not sell due to the tax implications to sell, letting development go forward. They not only stimulate real estate transactions, but also encourage U.S. businesses to reinvest in their domestic operations, as domestic and foreign property are not like-kind. It is not a “loophole” – taxes are still paid, whether upon the sale of the replacement property, incrementally through increased taxes from forgone depreciation, or by inclusion in a decedent’s taxable estate. Elimination of Section 1031 therefore would not create a tax on wealth, but a tax on cash flow.
While it is unlikely that tax reform will happen in this Congress, the current proposals may be the blueprints for future proposals, so it is important to pay attention. NAR advocates for responsible tax reform that provides the best opportunities for economic growth and job creation, and views these proposals as significant threats to real estate. NAR, together with other industry groups, sent a letter to the Finance Committee outlining its concerns with the proposals, and sent a letter to the House of Representatives outlining its priorities for tax reform – including deferral of gain on like-kind exchanges. NAR continues to watch the proposals very carefully and meets regularly with key lawmakers to discuss reform efforts.
More Tax Issues NAR is Monitoring
179D Energy Efficient Commercial Buildings Deduction:
The Senate Finance Committee approved a 2-year extender package, the EXPIRE Act, which renews 179D (it expired at the end of 2013). The EXPIRE Act will be debated on the Senate floor; the House Ways and Means Committee held a hearing on business-related tax extenders in April.
Leasehold Improvements:
The EXPIRE Act would also extend for two years the 15-year straight-line cost recovery for qualified leasehold improvements, which expired at the end of 2013.
Depreciation:
Currently non-residential commercial property is depreciated over 39 years, and residential commercial property over 27.5 years. The Senate proposal increases the depreciable life of all commercial real estate to 43 years and is retroactive; the House proposal increases the depreciable life of new properties to 40 years (non-retroactive).
Capital Gains Rate on Recaptured Depreciation
Under current law, the rate is 25%; under both the House and Senate proposals, the rate will increase to that of ordinary income.
Download our Issues & Actions white-paper to view these and other NAR actions on commercial issues at bit.ly/issuesactions
By: Erin Stackley (National Association of REALTORS®)
Click here to view source article.

Intel Corp.’s Rio Rancho operation has been passed over again for next-generation nanometer chip technology, but the plant remains an integral part of the company’s global production chain, according to New Mexico site manager Kirby Jefferson.
The plant, which employs about 2,800 people, was in the running for Intel’s forthcoming rounds of investment in 10-nanometer chips. That next-generation technology will follow the 22-nanometer chips now under production in other places and 14-nanometer chips Intel already is investing in at plants in Ireland and Arizona.
But New Mexico is no longer in the running, Jefferson told local business leaders at the Albuquerque Economic Forum on Wednesday morning.
And it’s uncertain if the local plant can compete for future investment in 7-nanometer chips, which will follow the 10-nanometer ones in a few years.
“This site was not selected for the 10-nanometer chips, that’s for certain,” Jefferson said. “They will do it at other facilities. Seven nanometer is the next one, and we still don’t know where that will be.”
This is the third time New Mexico has been passed over for next-generation chip technology. The Rio Rancho site currently produces 32-nanometer chips, following a $2.5 billion investment in 2009 to upgrade the plant from 45-nanometer technology.
Now, being three cycles behind the curve makes it more difficult to compete for next-generation chips.
“The investment would have to be extremely high here, because we’re so far behind,” Jefferson said.
Still, the local plant remains critical to Intel’s global future, because it continues to produce chip technology that is integral to nearly every product the company makes. In fact, the Rio Rancho site is operating at maximum capacity and is projected to continue at that pace for at least two more years.
“Today we’re full, which is great,” Jefferson said. “It’s not leading-edge technology, but it’s still pioneering technology, and we have a full supply – meaning more than capacity – for the next 18 to 24 months.”
In addition, the company expects the local plant to remain relevant for many years to come, Jefferson said, stressing that constant rumors of the Intel NM factory shutting down or being sold off to another company are baseless.
“The New Mexico plant is front and center with what’s going on at Intel,” he said. “Intel is committed to this community. The thinking all the way up the chain is to keep this operation going.”
Intel has been under pressure globally in recent years, because the chipmaker – which has dominated the personal computer industry for decades – was slow to get into mobile computing markets and is now playing catch up.
And with worldwide PC sales on the decline since 2012, company revenue and profits have been under pressure, leading to an announcement early this year that Intel would reduce its global workforce by about 5,000, or roughly 5 percent of the 108,000 it employed as of January.
The company began cutting its employee base at Intel NM last fall by about 400 positions.
Silver lining
Nevertheless, some of the market changes now shaking the computer industry could actually boost Intel’s long-term stability in New Mexico.
For example, the traditional focus on progressively reducing the nanometer size of transistors on chips, which increases processing power, is less important in today’s mobile computing world, where the industry instead needs energy-efficient chips that last longer on a single charge.
That makes the lack of New Mexico upgrades to smaller nanometer technology less important, given that Rio Rancho is heavily involved in designing and producing many products, including chips for mobile computing.
“Nearly 40 percent of Intel’s revenue now is associated with products beyond the PC,” Intel spokeswoman Natasha Martell Jackson told the Journal . “When we’re talking about the capabilities of a site and what can be done there, a wide variety of things are emerging from changes in the market and industry evolution. We have an opportunity to play a role in that wider ecosystem and continue to be relevant here in New Mexico.”
Doug Brown, dean of the University of New Mexico’s Anderson School of Management, said he’s “cautiously optimistic” following Jefferson’s speech.
“You have to appreciate the velocity of changing cycles in high-technology businesses like Intel. It’s remarkable to me how, given its size, Intel remains so nimble and able to respond so quickly and boldly to today’s economic challenges,” Brown said.
“I believe Intel’s top brass recognizes the importance of the plant here, and local executives like Jefferson are taking up the challenge to land new opportunities as the company evolves.”
By: Kevin Robinson-Avila (Albuquerque Journal)
Click here to view source article.