Las Vegas Real Estate Blog

COMMERCIAL PROPERTY NEWS

Real estate firm The Peebles Corp. has secured a 13-acre parcel just a half mile from the Las Vegas Strip for the development of the city's largest non-gaming hotel, Las Palmas Hotel & Residences. Peebles purchased the land for $65 million from Con AM Management Corp. for the upper upscale project, which will cost an aggregate $2.5 billion to complete.

Situated on Paradise Rd. across from the Wynn Las Vegas Golf Course, Las Palmas (pictured) will be a 4.5 million-square-foot development consisting of four 55-story high-rise structures designed by the architectural firm of Arquitectonica. In addition to 800 guestrooms and 1,000 condominiums, the property will feature a 40,000-square-foot spa, premier retail offerings and parking facilities beneath the towers. Scheduled to reach completion by 2009, the hotel structure, which will be topped by residences, will be the first of the towers to come online. A date for the completion of the three condominium high-rises has not yet been disclosed.

Las Palmas will also carry the distinction of being Las Vegas' sole five-star non-gaming hotel. "Our luxury brand strategy is to appeal to the affluent customer looking for privacy and exclusivity that is still within close reach of the city's action," R. Donahue Peebles, founder & CEO of The Peebles Corp., told CPN today. "In Las Vegas, more than 50 percent of travelers visit for reasons other than gambling. They are looking for an ultra-luxury hotel room, over-the-top entertainment, fine dining, spa services and shopping."

Before a gift of real estate can be accomplished, you and your potential donor should understand the true nature of the donor's current legal ownership interest. Donors may be unaware of their actual legal ownership interest. Legal counsel should be consulted to review the donor's legal documents (e.g., a copy of the donor's deed of conveyance, title insurance, historical abstract, etc.).

Types of real estate ownership interests are subject to the state law in which the real estate is located. Local counsel in the applicable state should be consulted, particularly as real estate transfer documents are prepared to execute a gift.

Generally, an outright gift of real property to a public charity entitles the donor to a charitable contribution deduction or credit equal to the fair market value of the property. There are estate-planning possibilities in the transfer of real estate to a charity and these possibilities are examined in the chapter on individual estate planning. For the most part, what makes the gifting of real property a little more complicated is the special tax effects.

There are two tax aspects upon the sale or gifting of real estate.

The first is the calculation of capital gain on the property whereby the proceeds upon disposition or the deemed proceeds of disposition upon the gift will be compared to the original cost of the depreciable property or of the land to determine if there is a taxable gain realized.

The second part, which is a bit more complicated, is that depreciable property is, through its life treated as a business asset, depreciated (capital cost allowance is taken on it) in order to reduce annual net income from the property.

Thus, on an annual basis, the original capital cost of depreciable property is reduced by capital cost allowance and every year a new undepreciated capital cost is formed. Upon sale, death, or gifting any capital cost allowance which was taken is reversed, if the proceeds of the disposition are greater than the undepreciated capital cost at the time of the tax transaction.

For example, if a building which originally cost $100,000 was depreciated so that its undepreciated capital cost was $60,000 and if the sale or gift is valued at $120,000, there would be two separate tax transactions.

The first is to compare the proceeds to the original cost of the building, $100,000. A $20,000 capital gain would be realized.

The next would be to take the original cost $100,000 and compare that to the undepreciated capital cost of $60,000 and, $40,000 of recapture will be realized. Whereas 50% of capital gains are taxed, 100% of recapture is taxable.

For Federal purposes a donation receipt can be used to offset all of the capital gain and all of the recaptured depreciation.

Editor -- Last Sunday's Nation's Housing column presents FHA reforms as a desirable outcome, ("FHA reforms may help even with big refinancings," June 27).

I've spent the last several years watching people take preposterous loans to purchase homes well beyond their means and seeing the real estate bubble expand as a result. These people knew what they were doing: They were gambling that the market would continue to rise. The mortgage industry, Greenspan and our self-righteous senators on the banking committee were all too willing to let them do it.

But, just as the dot-com bust was needed to reset the Nasdaq to realistic valuations, the real estate market must also reset to realistic valuations. If the government wanted to act, it should have acted years ago to provide better lending regulation. To come in now, after the damage has been done, and prop up the market can only forestall and worsen the necessary correction and waste taxpayers' dollars. In the meantime, responsible buyers will continue to be shut out of the market.

ADAM SCHWARTZ

It's a good time to trade up to a home that suits your circumstances better than the one you have now. Before interest rates go up any more, you will be able to afford a larger mortgage, and your present home will be affordable to a larger group of people.
If you want to buy before selling, you have to decide how to do it before your home equity is available to you. That could be tricky. Here are some ways to do it.
* Some home builders offer plans that allow up to 100 percent of the purchase price to be financed by a qualified buyer. If you take this route, financial advisors suggest taking a short-term adjustable rate mortgage (ARM) with an eye toward refinancing when you receive the proceeds of your home sale.
* You could take a second mortgage on your home to cover the down payment.
* In some cases, you can take a first mortgage on the new home and second mortgage to be paid off when you sell the one you have now. Any second mortgage should be a low-rate ARM.

In all cases, it's important to be realistic about the amount of cash your home will generate. It's better to plan on the low side of what the proceeds may be than to be overly optimistic about the amount of money the sale will bring.

A very successful real estate broker had a meeting with his new son-in-law. "I love my daughter, and now I welcome you into the family," said the man. "To show you how much we care for you, I'm making you a 50-50 partner in my real estate office. All you have to do is go to the office every day and learn the business." The son-in-law interrupted, "I hate office. I can't stand agents."

"I see," replied the father-in-law. "Well, then you'll work in the office and take charge of some the paperworks." "I hate paperworks," said the son-on-law. "I can't stand being stuck behind a desk all day."

"Wait a minute," said the father-in-law. "I just made you half-owner of my real estate office, but you don't like office and won't work in a office. What am I going to do with you?"

"Easy," said the young man. "Buy me out."