Spring 2008

Real Estate Implications of IFRS vs. GAAP
In 2007, the Securities and Exchange Commission (SEC) voted unanimously to allow certain foreign companies to file financial results using International Financial Reporting Standards without reconciling the figures to U.S. generally accepted accounting principles promulgated by the Financial Accounting Standards Board. This will hopefully attract more investment opportunities and stock listings to U.S. exchanges. Read more...

Real Estate Financing: How Bad Will It Be?
A continuing series of discouraging news about the economy and residential real estate in particular is indicating a bad year(s) for investors and homeowners alike. What initially was primarily a "pricing collapse" now threatens to end up as the worst recession for the past half century. The Federal Reserve Board, faced with a choice of preventing a deflationary environment or causing a sharp rise in inflation, has already cut the discount rate to 3.5 percent (as of this writing) and has indicated it may repeat the drop as low as the one percent that was reached in 2001, when recession or worse last threatened. Read more...

Q&A for Homeowners
What are the most obvious tax breaks that homeowners are eligible for? What are the not-so-obvious or often overlooked tax breaks homeowners are eligible for? What tax breaks are available for a home purchased in 2007? These questions and more are answered in this article. Read more...

Leases: The Takeover Gambit
When a new office building is completed, the landlord often is under pressure to fill the space as quickly as possible in order to meet a pre-leasing requirement of the take-out lender to pay operating expenses or for other reasons. One way to obtain a tenant is to assume an existing lease in another building in exchange for the tenant’s agreement to move to the new building. However, the current landlord, anticipating the possibility of such a takeover attempt, may have included in the lease an anti-raid provision that accelerates all future rent in the event a takeover occurs. Alternatively, the current landlord may threaten a lawsuit for unfair interference with a contractual relationship. Dealing with these issues is discussed in this article. Read more...

Mortgage Fraud: Title Company Disclosure Duty
A Texas court of appeals, overruling summary judgment for a title company, held that a genuine issue of material fact existed as to whether the title company had a duty to disclose to the mortgage lender facts that may indicate possible fraud. Home Loan Corporation v. Texas American Title Co., 191 S.W.3d 728 (Court of Appeals of Texas, Houston 4th Dist.). Read more...

Real Estate Workouts: A Game Plan
The maelstrom of issues affecting the world of finance to date have not negatively impacted these major real estate sectors: apartment, office, warehouse and retail. Apartments actually may benefit from home ownership turmoil; office buildings remain in demand and warehouse properties are stable due to continued strong international trade. Retail, the most susceptible to consumer cutbacks, appears relatively unaffected thus far. Nevertheless, continuing disclosures of unhealthy practices increase the risk of financial problems for less-than prime properties. This means that lenders (and investors) should be alert for signs of distress and be prepared to take prompt action to “work out” problems with real estate loans. Read more...

Somerset CPAs Real Estate Team News
Somerset 2008 Real Estate Seminar Series - The dates for our annual Real Estate Seminar Series have been set, beginning June 11. Michael Fritton will be the speaker for each session, and registration is open on the Seminars page of our web site.

Community Events - We are proud of our employees' volunteer and fundraising efforts. A few of the events and organizations we are currently supporting include the Junior Achievement Bowl-4-Bizkids event on April 25, Rebuilding Together Indianapolis on April 26 and the Indy 500 Volunteer Team on May 3.

Real Estate Focus is provided by Somerset’s Real Estate Team for our clients and other interested persons upon request. For additional information on the issues discussed, please contact Michael Fritton, CPA. Since technical information is presented in generalized fashion, no final conclusion on these topics should be made without further review. 

These articles were written by and published herein with the permission from professionals of BDO Seidman, LLP.  Somerset is a member of the BDO Seidman Alliance, a nationwide association of independently owned accounting and consulting firms.