Whoever said, “What you don’t know, won’t hurt you” probably was not thinking about a Real Estate transaction when they said it. Today’s buyer wants to know everything possible about the house they are buying. With so much riding on the home inspection, it might be alarming to some that anyone with a flashlight and a truck can call themselves an inspector in Rhode Island. But soon, all that will change.

A law to require mandatory licensing of home inspections in Rhode Island was originally to take effect on July 1, 2001. However, the licensing program to be administered by the Rhode Island Contractors Registration and Licensing Board was never funded and home inspector licensing has been in limbo ever since that time. A Special House Commission to examine the issue of Licensing Builders and Contractors successfully lobbied for the funding of this licensing program as well as crafting a new law to provide more protection for consumers who hire contractors.

This week, Rich and Cherie had Paul Brunetti, from Griggs and Browne on to talk about the upcoming licensing regulations. In addition to being one of the most experienced home inspectors in the state, Paul is the President of the Rhode Island Association of Building Inspectors and a member of the RI Contractors Registration and Licensing Board that will oversee the licensing of Inspectors.

The Board’s goal is to begin licensing home inspectors sometime in 2008. However, an exact date is not yet available at this time as the Contractors Registration and Licensing Board will need time to rewrite its regulations, hold public hearings and make other changes in order to implement the law.

Home Inspectors and Associate Inspectors will be required to the following:

1: Carry mandatory errors and omissions insurance.
2: Carry an identification card issued by the board.
3: Include their license number and contact information for the Contractors Registration and Licensing Board on all advertisements and inspection reports.
4: Comply with examination, experience, and continuing education requirements except for those experienced contractors and home inspectors who will be grandfathered.

How will I know whether an inspector holds a valid license or has a history of complaints? To learn more about these changes, visit the Contractors Registration and Licensing Board web site, by clicking here: http://www.crb.ri.gov/default.php While there is little new information on the site now, it will be updated as the changes go into effect.

This week’s Real Estate Insight:

In Real Estate, deals often hinge on a successful home inspection. Buyers want to know as much as possible about the property that could become their biggest asset and avoid costly surprises down the road. The American Society of Home Inspectors has a great Web site with lots of great information.

Have you ever felt like you missed the boat? Has everyone taken advantage of a great deal and left you standing on the shore waving goodbye? Well, that’s the feeling that a lot of my investor clients have after learning about 1031 tax deferred exchanges. Investors buy real estate to earn a profit. Decisions are made to determine the effects of location, potential rents and expenses, financing and other factors to realize as much of a profit as possible. Once the profit is made, the typical investor sells his property, pays his taxes and reinvests in other real estate.

The vast majority of real estate investors seldom make use of one of the most valuable techniques for increasing and preserving profit we have available: The Tax Deferred Exchange. Like all things IRS, the 1031 Exchange seems mysterious and complicated, but the truth is that the complicated parts are handled by a 1031 facilitator. All you have to do is have your ducks in a row: have a property to sell, identify and purchase another and be prepared to act quickly when it happens. You will need the services of a qualified intermediary (Q.I.).

This week we had F. Moore McLaughlin CPA, Principal of All States 1031 Exchange Facilitator, LLC. to help shed some light on this often overlooked wealth management tool. Since there are no licensing requirements for a QI, you should be careful when selecting a facilitator.

In general, there are several basics to consider:

1: All proceeds go to an escrow fund managed by a qualified facilitator.

2: You have 45 days from settlement to identify replacement properties.

3: You can identify up to three properties at fair market value or you can identify more properties if their total fair market value is not more than twice the value of the relinquished property.

4: There must be an actual purchase, generally within 180 days after the original property was transferred.

5: The replacement property cannot be for personal use.

6: If the value of the replacement property is less than the value of the relinquished property, then there may be taxable profits.

Have I peaked your curiosity? Want to know more? All States 1031 has ALL the answers. Click HERE to request a complimentary educational guide to “Building Wealth Through 1031 Exchanges”.

This week’s Real Estate Insight:

A tax exchange defers taxes, it does not eliminate them. You could need settlement papers 30 years down the road, so don’t throw out any pertinent papers and as always, consult an expert before attempting such an undertaking.