Inside the CARES Act: What Real Estate Agents and Their Clients Should Know

March 31, 2020

A $2.2 trillion economic aid package – the Coronavirus Aid, Relief, and Economic Security Act (CARES)– has been signed into law by President Trump. The CARES Act follows two measures: an $8.5 billion stimulus bill, and the Families First Coronavirus Response Act, aimed at providing financial assistance to Americans impacted by the coronavirus pandemic. It covers freelance and gig workers, including real estate agents, and outlines key provisions for current and future home buyers and sellers. 

What can real estate agents and clients expect with this new legislation? 

The KW Research team comprised of Ruben Gonzalez (chief economist), Michelle Figgs (senior industry analyst), and Ashley Kelm (industry relations manager) outline key highlights below. 

  1. Direct Payments: Americans who earn up to $75,000 in adjusted gross income will receive direct payments of $1,200 (up to $112,500 in income for a head of household return and $150,000 for joint returns). An additional $500 will be allotted per each child under the age of 17. The payment amounts are reduced with increased income up to $99,000 for individuals and $198,000 for couples. Payments will be sent electronically or by paper check. Incomes above the threshold amounts are not eligible. 
  2. Loan Programs: Expansion of Small Business Administration (SBA) loan programs, specifically the Economic Injury Disaster and Paycheck Protection Program loan programs. Both programs are available to businesses with 500 or fewer employees.
    1. Economic Injury Disaster Loans – Relief up to $2 million that may be used for paid sick leave, payroll, rent/mortgage, and certain debt obligations and increased costs related to COVID-19. The coverage period runs Jan. 31 – Dec. 31, 2020.
    2. Paycheck Protection Program Loans – Relief calculated at 250% of the average salary expenditures/month for 2019, up to $10 million, and may be used for payroll, rent/mortgage interest, and utilities. All or a portion of these loans will be forgivable for businesses that maintain the same average payroll levels as in the previous year. The coverage period runs Feb. 15 – June 30, 2020.
  3. Early Withdrawal: Realtors with retirement accounts, including IRAs, can take early withdrawals (related to coronavirus) of up to $100,000 without having to pay the 10% early-withdrawal penalty. Agents 70 ½ or older do not have to take the required minimum distributions from retirement plans in 2020 or to pay taxes on those distributions.
  4. Deferred Payments: Employers and self-employed individuals can defer payment on the employer’s share of Social Security payroll taxes from March 27 – Dec. 31, 2020. The deferred tax can be paid over the following two years, with 50% required by Dec. 31, 2021, and the remaining 50% due by Dec. 31, 2022. Employers who utilize the SBA’s paycheck protection loan are not eligible.
  5. Unemployment Assistance: Provides “Pandemic Unemployment Assistance” to those, including independent contractors (e.g. real estate agents), who are unable to work, as a direct result of COVID-19, and don’t qualify for regular unemployment benefits. Individuals who are able to telework or receive sick leave or other paid leave benefits aren’t eligible.  In addition to state aid, an additional $600 per week is allocated to eligible individuals for a period of up to four months through July 31, 2020. State-level unemployment benefits are extended 13 weeks. The extension runs through December 31, 2020.

Noteworthy for clients: 

  1. Loan Forbearance: Permits borrowers with a federally backed mortgage loan experiencing financial hardship because of COVID-19 to request forbearance (up to 180 days) on the loan, regardless of delinquency status. The borrower will not accrue any additional fees or penalties beyond the regular amounts.
  2. Student Loan Suspension: Requires lenders to suspend payments on federal student loans through Sept. 30. Interest will not accrue and nonpayment during the six-month period won’t affect credit scores or an individual’s qualification for loan forgiveness.
  3. Additional Tax Deductions: Allows individuals (who don’t itemize their deductions) to make a cash donation of up to $300 to certain qualifying charities. The additional contribution can be deducted “above the line,” so the taxpayer would receive the deduction on top of the standard deduction.

What happens next? 

The federal government is still working on the implementation of the CARES Act; additional regulations and updates will follow. For a full overview of the CARES Act and additional advocacy initiatives, visit the National Association of Realtors. For specific information regarding your financials, it is advised to connect with professional supports, including your lawyer, tax accountant and/or financial planner. 

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