Florida 14 hours Group Ownership and Disposition Strategies course.

Approved by the Florida Department of Business and Professional Regulation

Today, group investing is a popular alternative for the way title to commercial and investment real estate is held. Groups formed with as few as two people and some with thousands of investors own a substation portion of commercial and investment real estate in the U.S. When a real estate agent gets involved representing their client in a group structure the agent is often in unfamiliar territory. This course exposes the agent to various IRS and Securities laws that the agent, their client and the client's legal and tax advisors often face in making the decision if an investment in a group is appropriate for the client. In addition many agents may want to sponsor group investments on their own and, to protect their investors, the agent needs to know these IRS rules and Securities laws.

Continuing Education is required for both active and inactive Florida real estate brokers and sales associate. Active or inactive brokers or sales associates must take a 14-hour continuing education course during each 2-year license period. The course must contain 3 hours of core law and 11 hours of "specialty" topics that focus on real estate issues relevant to Florida Statute, Chapter 475. This course meets the prescribed 14 hours of continuing education.

Florida Real Estate License Law Update

Learning objectives for the licensee:

• Understand the recent law changes enacted by the Florida Real Estate Commission.
• Learn the process of becoming a real estate practitioner.
• Explain the qualifications required to practice real estate.
• Explain the steps a licensee must take to renew their license.
• Know the difference between an active license and a voluntarily inactive license.
• Audits and inspections, understand why the Department of Business Professional Relation requires them and how to be in compliance.
• Know what is required of nonresident licensees and what states Florida has a mutual recognition agreements.

Registration and Licensing Requirements

Learning objectives for the licensee:

• Learn about the real estate recovery fund and why it was created.
• Discuss the duties of a designated sales associate.
• Discuss the duties of a designated salesperson.
• Explain what the guidelines a broker must apply while maintaining an escrow account.
• Understand interest bearing escrow accounts and the types of disbursement methods that are allowed.
• Learn the other important areas of real estate knowledge.

Other State and Federal Laws

Learning objectives for the licensee:

• Understand the Florida Vacation Plan and Timesharing Act.
• What disclosure is required in a residential rental agreement.
• Explain the landlord's and tenant's obligation to maintain the premises.
• Explain the brokerage relationship disclosure act and the required disclosures.
• Explain the "Bert J. Harris, Jr., Private Property Rights Protection Act" and why it was created.
• Learn the other state and federal laws.

Violations and Penalties

Learning objectives for the licensee:

• Explain the range of penalties, from lowest to highest, are available to the Florida Real Estate Commission.
• Explain how can a respondent object to a violation.
• Understand what is a citation is and to whom can it be issued against.
• Name 6 violations that constitute grounds for Notice of Noncompliance.

Understanding the Tax Classification of Assets

One of the three phases in real estate investing is the disposition phase. Agents who practice in the field of commercial and investment brokerage, need to be able to assist their clients in formulating appropriate disposition strategies and they need to be aware of the current state of the Federal Income Tax law relating to disposition issues. Learning objectives for the licensee include:

• Know the law and the regulations which affect the disposition phase of commercial and investment real estate
• Determine when they are in position to analyze the different investment strategies in the disposition of commercial and investment real estate
• Determine when it is advisable to suggest to their clients that they seek professional legal and accounting advice
• Recognize when a tax deferred exchange is a possible strategy for clients
• Recognize when an installment sale is a possible strategy for their clients

Applying The Passive Loss Rules At Disposition

Topics in the chapter include learning what assets are subject to the passive loss rules at their disposition and application of the passive loss rules to different methods of disposition. Learning objectives for the licensee include:

• Understand the current income tax rules.
• Explain the three types of activities recognized by the Code.

Netting Of Gains And Losses

Topics in the chapter include a discussion of the tax treatment on the disposition of the various assets a commercial and investment agent or broker will encounter and the tax treatment when an investor has multiple transactions in a single year. Learning objectives for the licensee include:

• Be able to recognize when a client needs to seek professional accounting or tax advice when the client will experience or has experienced capital gains or capital losses on the sale of assets.
• Understand the treatment of capital gains and losses from the disposition of capital assets, including Section 1231 assets.
• Explain how the Section 1231 gains or losses are determined.
• Learn the tax treatment of the disposition of Section 1221 assets.
• Understand how to integrate the passive loss rules on a sale with the netting of capital gains and losses.

IRC Section 1031 Highlights

Topics in the chapter include understanding the basics behind a simultaneous tax deferred exchange and learning the time requirements placed on non-simultaneous exchanges. Learning objectives for the licensee include:

• Recognize when a tax deferred exchange is a possible strategy for clients.
• Understand how the Starker Philosophy affected the IRS Section 1031 code.
• Explain the 3-property rule and the 200 % rule.
• Determine the rules that are applied to the exchange period.
• Determine what unlike property would be during an exchange.

Recognizing When It Is Better To Sell Than To Exchange

This chapter contains a Case Study that will apply the tax concepts covered in earlier chapters to a typical ‘real life’ situation. Learning objectives for the licensee:

• 1. Analyze the Case Study and so as to determine when it is better to sell or exchange.

Investment Base

This chapter introduces the student to the concept of Investment Base and shows the student how to apply this concept. Learning objectives for the licensee:

• Learn how to decide whether it is beneficial to complete a disposition in an exchange transaction.
• Define the investment base theory.
• Understand when it is best to sell or hold.
• Explain Partnership distributions and how it affects the IRS code.

Special Issues In Exchanges

Topics in this chapter include two special areas the student may encounter while working with tax free exchanges. Learning objectives for the licensee:

• Understand the term "Which is to be Held".
• Explain Partnership Distributions.

Installment Sales

In this chapter the student will learn what an installment sale is and exposed to the way installment sales are analyzed on a before and after tax basis. Learning objectives for the licensee:

• Recognize when an installment sale is a possible strategy for their clients.
• Determine when an investors cash flow after taxes.

Group Ownership of Commercial and Investment Real Estate

Group investing is a popular alternative way for the ownership of real estate to be held. Groups formed with as few as two investors to groups with several thousand investors own a substantial portion of the commercial and investment real estate in the United States. It is important for a real estate agent or broker to be aware of the many facets of group ownership so as to protect the investors who are anticipating making an investment in a group which will own commercial and investment real estate. Learning objectives for the licensee:

• Learn the areas of group investing in which a commercial and investment agent or broker can become involved.
• Understand the three basic types of syndications that occur in the marketplace.
• Be aware of the need to consult with allied professionals, such as a attorney or accountant, when considering setting up a group investment.

Investing in a Group

Topics covered in this chapter include the reasons for using a group to own commercial or investment real estate, the advantages and disadvantages to the investor who chooses to invest in a group and the additional areas of consideration for an agent or broker who becomes involved in group ownership. Learning objectives for the licensee:

• Recognize the reasons that investment groups are formed.
• Understand the advantages and disadvantages for the investors deciding whether or not to invest in a group investment.

Legal Entities Used To Form Group Investments

Topics in this chapter include General Partnerships, Limited Partnerships, and Limited Liability Company. Learning objectives for the licensee:

• Know the difference between General and Limited Partnerships.
• Understand the emergence of the Limited Liability Company (LLC).
• Explain the application of securities rules.
• Describe the steps to form a group investment.

Security Regulations

Topics in this chapter is and brokers include a discussion of what constitutes a security, how the federal security laws effect what commercial and investment agents and brokers, and the common exemptions available from federal securities laws. Learning objectives for the licensee:

• Identify the four characteristics of an investment.
• Determine when the investment would be considered a security.
• Demonstrate when it is imperative that the agent seek competent legal and accounting advice.

Private Placement Memorandum for Real Estate Securities

In this chapter there is a discussion of the major components of a Privat ise Placement Memorandum and when it would be required that one be developed. Learning objectives for the licensee:

• Understand what is required for an offering circular and why it is needed.

Steps to Take in Forming Your First Group

The chapter contains a suggested series of events that might be taken when forming an investment group. Learning objectives for the licensee:

• Understand and explain the steps required to form a group investment.

Closing Out the Group

The chapter contains a suggested series of events that might be taken when closing out an investment group. Learning objectives for the licensee:

• List the chronological activities the sponsor must undertake to properly close out the group.

Compensation to Promoter

This chapter discusses the methods of payments typically made to the sponsor, or promoter, and the common structures of thes payments in group investments. Learning objectives for the licensee:

• Explain the various methods of compensation to be paid to the sponsor of the group.