On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act and subsequently signed into law. The $2 trillion stimulus bill is the largest economic stimulus legislation in US history since the New Deal. As such, it is quite sweeping and offers relief to several industries impacted by COVID-19 as well as small businesses, employees, individuals, and families. It is worth looking into the bill in full to assess everything included in there, but we’ve collected below key takeaways from the CARES Act that specifically impact real estate agents and their clients.
- Mortgage forbearance:
- Any borrower with a government-backed mortgage (i.e., Fannie Mae, Freddie Mac, HUD, VA, USDA) may ask for a forbearance lasting up to 360 days and no proof of hardship is required. Furthermore, no foreclosure action is permitted for 60 days from 3/18/2020, abandoned or vacant property being the only exceptions.
- Any person who owns a multifamily property and was current on their mortgage as of 2/1/2020 and has a federally insured, assisted or supplemented loan (Fannie Mae, Freddie Mac, FHA or loans backed or assisted by any branch of the federal government) may request forbearance for 30 – 90 days due to financial hardship. Any person receiving this forbearance is not permitted to evict or charge late fees to tenants for the duration of the forbearance period.
- Eviction moratoriums:
- For 120 days, there is a nationwide moratorium on eviction filings, fees and penalties on tenants for non-payment for any property insured, guaranteed, supplemented, protected or assisted in any way by government programs.
- Housing credits and funds:
- Additionally, the government designated the following:
- $1.25 billion for Section 8 voucher rental assistance
- $5 billion for Community Development Block Grant (CDBG)
- $1 billion for project-based rental assistance
- $50m for Section 202 Housing for the Elderly
- $15 million for Section 811 Housing for Persons with Disabilities
Small Business Provisions
- Economic Injury Disaster Loans (EIDL)
- Businesses with 500 or fewer employees who can demonstrate financial hardship as a result of COVID-19 are eligible for loans up to $2 million. The SBA must waive personal guarantee for loans under $200,000. This legislation also provides $10 billion in funding to provide emergency advances of up to $10,000 forgivable debt within 3 days of a small business applying for EIDL. There are other provisions including what the loan money can be used for, so be sure to review the details and eligibility requirements when applying.
- SBA 7(a) Payroll Protection Program
- Businesses with 500 or fewer employees are eligible for SBA 7(a) loans to help cover expenses for the period of 2/15/2020 – 6/30/2020. These loans can be used for payroll, rent or mortgage interest and utilities. Even more, businesses that maintain at least 75% of the average payroll levels of the previous year, all or part of these loans will be forgivable. As employers’ payroll levels drop below 75%, the forgivable amounts phase out accordingly.
Taxes and real estate agents
- Tax credits and fee waivers
- Americans, including real estate agents, whose incomes are below the thresholds will receive cash payments from the government for $1200 for each adult and $500 for each child under 17.
- Real estate agents can take early withdrawals of up to $100,000 from their retirement accounts without having to pay the 10% penalty. After withdrawing the money, you can recontribute it over 3 years or else pay the taxes on the withdrawal amount over 3 years.
- Business owners with 100 or fewer employees can claim a refundable employee retention tax credit against payroll taxes. Larger businesses may also claim the credit, but there are more restrictions.
- Other additional credits are available for real estate agents and brokers so if you are having trouble making ends meet as a result of COVID-19 make sure you check with a tax or financial professional about your options.
COVID-19 emerged on a global stage and quickly upended the American workforce and economic stability. However, the government has responded with legislation aimed at providing relief to those negatively impacted by COVID-19. If you are struggling with housing, income or making payroll, be sure to research the CARES Act to see what relief you might be eligible to receive.