Financial experts say same-sex marriage equality brings pile of new legalese; financial summersaults brought on by state-Federal rift
In New York, the honeymoon has just started for same-sex newlyweds. For these same-sex couples, champagne, bonhomie and the express good will of friends are the icing on the cake after their decades-long push for gay equality in New York. However, financial and legal experts say same-sex couples are poised to deal with a myriad of new issues when it comes time to make difficult life decisions, as the Federal government doesn't officially recognize same-sex marriages.
Death and taxes doubly certain for same-sex couples
Newlyweds in New York will be able to file their taxes in New York State as jointly or married. Only one of the pair can claim head of household for Federal Taxes, but neither can claim married. And that's just where the problems start, say experts.
New York issues tax returns based on what the Federal Government grants the filer. In other words, in order to get a New York tax return, one has to have a Federal income tax return. As legally married in New York, and unrecognized at the Federal level, this presents a massive bureaucratic headache, but one that tax-services are remedying through extra-legal means.
In order to surmount this tax-filing conundrum, couples have to file their official tax return as 'unmarried' with the Federal government and then file an unofficial, dummy Federal tax return as married. Only in this way can same-sex newlyweds in New York State supersede the Federal Government's alternative tax code.
Because the IRS, by law, must follow the Defense of Marriage Act, same-sex couples will have to indicate why their state and Federal marital status is different.
LGBT activist say legal disparity costly and speaks to pervasive inequality In the eyes of the gay community and many same-sex partners, these Federal-state legal disparities within the tax code speak to deeper, pervasive inequality and are the real heart of the LGBT Civil Rights Campaign. Under New York law, same-sex partners are financially and legally equal. Once accountants and lawyers cross the fence into Federal territory, compound legal matters become expensive and murky. LGBT activist are pushing for full financial equality, which they believe is apropos unconditional social equality for gays and lesbians.
In sickness and in wealth
Because the Federal Government does not recognize same-sex marriages, spousal insurance is taxed as employee income. Same-sex couples cannot collect on their spouse's social security benefits and do not have any legal right to their spouse's retirement account.
When a spouse inherits an individual retirement account—an IRA—they cannot capitalize on fringe benefits, like delaying distributions and tax-deferred compounding, or other financial advantages heterosexual couples are allowed. Financial experts in and outside of the gay community have indicated this could lead to huge net losses for same-sex couples. What's more, they say, IRAs are essentially designed to be nest eggs, so if one partner is the primary breadwinner, the other stands to be in the poor house at his or her partner's death.
The expenses of equality
There are more than a few stories of longtime partners abandoning the wedding aisle at the 11th hour because they were unaware of the financial obligations married couples have. The words in sickness and in health have legal resonance, too: married couples are financially bound by law to support a spouse if he or she falls on hardship like job loss, illness or disability. This possibility of onerous emotional and financial burden resulting from illness or accident has lead some same-sex couples to reconsider walking down the aisle.
In New York State and other parts of the country where same-sex marriage has been legalized, financial experts are ready to assist same-sex couples with the myriad of financial issues generated by compound Federal-state legal disparities. Many gay-friendly businesses and gay-advocacy groups have provided leadership and expertise on issues specific to LGBT identifiers. For instance, many same-sex couples are utilizing gay advocacy resources like GayRealEstate.com to address domestic issues, like buying a home, taking out a mortgage or paying your taxes. Gayrealestate.com specializes in servicing LGBT clients with the process of buying a home and has been in the gay-friendly real estate business for twenty years.
Gay-friendly services ready to assist newlyweds
Their fortunes freshly united, New York same-sex newlyweds may be eating wedding cake, but they are preparing for the financial conundrums that lie ahead. Financial advisers, pastors, lawyers and online organizations such as www.gayrealestate.com are bracing for the influx of newlyweds expected now that same-sex marriage is legal in New York. These services have overwhelming suggested that same-sex partners consult experts early and often when it comes time to get married or buy a home.
Despite the downgrading of America’s credit rating, there is cause for gay and lesbian home buyers to feel somewhat optimistic. That’s because LGBT buyers now have an even better chance of securing an extremely cheap mortgage to buy a home at price levels that are highly affordable. They also have the unprecedented advantage of knowing where prevailing interest rates are headed over the next 18 months, which can help them lock in a bargain mortgage rate with keen foresight.
The Silver Lining for LGBT Home Buyers
Mortgage rates had already been super low in recent weeks. But as ironic as it may seem, the recent USA credit downgrade has put additional downward pressure on mortgage rates¯which will offer LGBT buyers even lower monthly house payments. Meanwhile the median price of residential properties has been tantalizingly affordable for many months.
The day after the markets tanked, for example, the Fed did something totally unexpected by publically announcing what it plans to do with interest rates for the next couple of years. The Fed is notoriously tight-lipped when it comes to revealing its forward-thinking strategies and policies, keeping that information top secret. But this time Fed Chairman Bernanke came right out and stated the Fed agenda for the next two years, declaring that rates will be kept extremely low all the way through 2013. That disclosure injected much-needed confidence into the financial markets and helped the stock market recover almost all of its losses. But it also set the stage for incredibly affordable mortgage rates within the coming months.
Fed Rates Influence Mortgage Rates
Rather than having to play a guessing game LGBT borrowers can now be reasonably certain that mortgage finance rates will remain highly affordable. That’s the next best thing to having a mortgage market crystal ball. As a result, gay and lesbian buyers have a strong incentive to take advantage of some of the cheapest mortgage rates in history.
Normally a downgrade of America’s credit rating would cause investors to dump their holdings of United States Treasury bonds, which would have the immediate effect of raising long-term interest rates. That scenario would be terrible for the domestic economy and would soon propel mortgage rates higher, making it harder for gays and lesbians to purchase homes. Fortunately, however, just the opposite happened. Amid all the recent chaos, economists were somewhat surprised and very relieved to find that investors continued to have a strong appetite for United States Treasury bonds. Financial instruments backed by the USA are still viewed as the best game in town, and as long as investors eagerly buy American bonds the interest rates on loans made in the USA should remain cheap.
A Great Time to Borrow at Bargain Basement Levels
The market for Treasury bonds guides the direction of mortgage interest rates, in other words, and has a big influence on home loan prices. Earlier this year, for example, the federal government invested heavily in purchases of those same bonds by buying 600 billion dollar’s worth. The sole purpose of that stimulus program was to help support the U.S. economy and the housing market by making it easier to borrow money at inexpensive rates.
That particular program ended a couple of months ago, however, to the chagrin of many people in the real estate industry. But in light of this month’s financial upheaval government officials have already hinted that they may resume the intense buying program¯which would do even more to keep mortgages inexpensive. While these conditions continue, LGBT borrowers can use a safe fixed-rate mortgage and lock in a rock bottom rate. That virtually guarantees low monthly payments for the life of the loan.
But LGBT Buyers Should Control Mortgage Risk
Using an adjustable rate mortgage (ARM) right now is not recommended, however, because with rates so low there is little room for them to go any lower. Economists concur that within 3-4 years rates will likely go much higher, especially as the economy recovers, and that will typically make ARM loans more expensive. So it is best to rely on safe, predictable fixed rate mortgages for the next 2-3 years.
Gay real estate experts also generally recommend leveraging the value of working with a LGBT or gay-friendly Realtor. That’s because gay and lesbian home buyers have special considerations that are best addressed by someone who is keenly familiar with the unique issues faced by LGBT buyers. Those include, for example, experience with legal complications that gay and lesbian couples may encounter when cosigning deeds or mortgages. Gay real estate agents typically also have firsthand information about where to find the most supportive gay-friendly communities.
For expert help with all your real estate needs contact www.GayRealEstate.com. Or call toll free at 1-888-420-MOVE (6683). The members of this network are dedicated to active support of the global LGBT community.
With New York’s recent gay marriage headlines bursting at the seams of every major newspaper. The National Association of REALTORS® is also making a difference toward equality.
July 12, 2011 Denver, CO - The National Association of REALTORS® recently added language to its code of ethics banning discrimination based on sexual orientation. Article 10 of NAR’s REALTORS® Code of Ethics previously prohibited the “denial of its professional services to any person for reasons of race, color, religion, sex, handicap, familial status, or national origin.” Coming ahead of any similar legislation on the part of the Federal Government, NAR’s amended code of professional ethics to include sexual orientation reflects its members commitment to “a higher standard” of ethics. Furthermore, the committee understands its decision as a logical evolution for a business organization that sells a brighter, more equitable tomorrow for all Americans.
by Jeff Hammerberg, U.S. Condo Real Estate Correspondent
The demise of the mortgage industry is the news of the year. Exotic loans, predatory lending practices, high-flying investors buying risky mortgage securities, and the plight of homeowners faced with mounting monthly payments are just a few of the topics making headlines everywhere. But little attention is given to teaching consumers how to pay off their mortgages completely, in a shorter amount of time, so that they are no longer tied to borrowed money and can own their homes free and clear.
Buying your own home is a practical realization of the American Dream. We who live in the USA pride ourselves on the value of freedom in our everyday lives, and paying off your mortgage is one of the most liberating goals a homeowner can accomplish. The way to shrink your mortgage is to pay off the principal at an aggressive pace. More and more consumers are making it happen by following disciplined, strategic formulas.
Jeff Hammerberg was a real estate agent in Littleton, Colo., in 1993 when a gay couple who wanted to see some homes was directed to an agent who was handling "floor time," or working with walk-ins.
"I knew him and liked him," Hammerberg recalled. "He was a decent guy, a married guy in the suburbs with three kids, but I'm not even sure he had ever seen a gay couple before."
The demise of the mortgage industry is the news of the year. Exotic loans, predatory lending practices, high-flying investors buying risky mortgage securities, and the plight of homeowners faced with mounting monthly payments are just a few of the topics making headlines everywhere. But little attention is given to teaching consumers how to pay off their mortgages completely, in a shorter amount of time, so that they are no longer tied to borrowed money and can own their homes free and clear.
We can confidently predict that 2008 will be another lukewarm year in terms of real estate. Recent data shows that home sales have declined to record low territory, sinking year-to-year more than we have seen in over a decade and a half.
Meanwhile, mortgage troubles have spread like a virus, impacting everything from jumbo mortgages and home equity loans to consumer lending rules and credit card rates. For those trying to sell a home, 2007 was a constant uphill battle.
Price pressures continue to strengthen the bargaining positions of buyers, while homeowners are feeling more desperate to sell, regardless of how many concessions they might have to make to close their deals. With more than half a million brand new homes languishing on the market unsold and a glut of existing homes that will take an estimated 8-9 months to sell, buyers have plenty of reasons to rejoice.
