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Lewes, Delaware
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April 11, 2008     Cape Gazette
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April 11, 2008

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CAPE GAZETTE - Friday, April 11 - Monday, April 14, 2008 - 37 BUSINESS& REAL ESTATE New law helps provide relief from mortgage debt One of the must-pass provi- sions needed to make the treasury department's recently announced subprime mortgage relief plan work was an exclusion of mort- gage debt forgiveness from a homeowner's income. Otherwise, beleaguered home- owners would also become sad- dled with unmanageable income tax debt. The centerpiece of the Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) is a three-year exception for debt forgiveness on qualified home loans. In addition, a handful of other real estate-related benefits found their way into the new law. These include a significantly expanded time period for a sur- viving spouse to use the higher homesale exclusion, a three-year extension of the mortgage insur- ance premium deduction, the exclusion from income of certain state find local tax breaks given to firefighters and emergency med- ical technicians, clarification of student housing eligible for the low-income housing credit, and a more liberal qualification test for cooperative housing corporations. Foreclosure relief - When a lender forecloses on property, sells the home for less than the borrower's outstanding mortgage and forgives all or part of the ,unpaid mortgage debt, the tax code normally would consider the cancelled debt to be taxable income to the homeowner. The Mortgage Forgiveness Debt Relief Act of 2007 excludes from taxation discharges of up to $2 million of indebtedness that is secured by a principal residence and is incurred in the acquisition, construction or substantial improvement of the principal res- idence. This special relief is available for three years; it began Jan. 1, 2007, and will end Dec. 31, 2009. Relief is expected to total more than $600 million, which represents direct cost sav- ings to homeowners. For example, Adam's principal residence is subject to a $220,000 mortgage debt. Adam's creditor forecloses in 2008. Due to declining real estate values, the residence is sold for $180,000 later that year. Adam has $40,000 discharge of indebtedness income. Before the new law, the $40;000 would have been includi- ble in Adam's gross income. Mortgage workouts - Mortgage renegotiations are included inthe law's new exception, in addition to covering foreclosure situations. FINANCE Frederick Dean Jr. When a lender determines fore- closure is not in its best interest, since the typical foreclosure nets the lender only about 60 cerrts on the dollar, it may offer a mortgage workout under which the terms of the mortgage are changed to result in a lower monthly pay- ment. One workout plan organ- ized by the Bush administration and a group of lenders would forgo adjustable rate resets for up to five years. This and other mortgage workouts technically would result in forgiveness of indebtedness income that would be taxable to the homeowner if it were not for the new law. Indebtedness - The new law applies to qualified principal resi- dence indebtedness, which means acquisition indebtedness. This is indebtedness that is generally incurred in the acquisition, con- struction or substantial improve-. merit of the principal residence of the taxpayer and is secured by the residence. It also includes refinancing of such debt to the extent that refi- nancing does not exceed the amount of the original indebted- ness. Unlike the current deduc- tion for qualified residence inter- est that includes interest on $1 million in acquisition indebted- ness plus $100,000 of home-equi- ty debt, the new mortgage debt exclusion includes $2 million in acquisition indebtedness but counts no home-equity debt not used for renovation. Mortgage insurance deduction - The Tax Relief and Health Care Act of 2006 (P.L. 109-432) tem- porarily allowed taxpayers to take an itemized deduction for premi- ums paid or accrued on qualified mortgage insurance as deductible, qualified residence interest. To be deductible, the premiums must be paid or accrued for qualified mortgage ilasurance Obtained in connection with. acquisition indebtedness on a qualified resi- dence. The deduction is phased out at 10 percent for each $1,000 by which the taxpayer's AGI exceeds $100,000. The Mortgage Forgiveness Debt Relief Act of 2007 temporarily extends the deduction for qualified mortgage Continued on page 38 The Med Spa offers variety of aesthetic therapies and treatments Renowned stylist sells Lewes shop By Leah Hoenen Cape Gazette staff Bad Hair Day? in Lewes is now The Med Spa at Bad Hair Day.'? To celebrate the change, new owner Dr. Kelly King is offering special-event pricing through the month of April, in addition to compli- mentary consultations. According to the owners, The Med Spa offers everything a body needs, starting with the full menu of hair services clients have come to expect, plus spa treatments such as massage and manicures and pedi- cures, as Bad Hair Day? previously offered. Now, with King available full time, the spa also offers skin therapies such as Botox and filler injec- tions, mesotherapy to reduce fat deposits, photoreju- venation, laser vein ablation and hair removal, microdermabrasion, and chemical and micro peels. King has added the medical side with spa style. In the quiet treatment rooms, music plays in the back- ground. "What you see now in this industry is the gravita- tion toward spas having a doctor come in once a week or once a month to do medical treatments. But to have a physician in aspa full time is unique," said King. King is trained as an emergency room physician, but after working with a plastic surgeon friend in Washington, D.C., he is now interested in aesthetics. The new services have transformed the space. Hair stylists are still busy at work on one side of the building, while on the other side, past a panel of glass bricks, is the quiet, more enclosed spa, where King conducts medical treatments and clients are given massages. Bad Hair Day? was already trending toward offer- ing spa services, said owner Drexel Davison, with massages and manicures and pedicures. Davison took a break from cutting hair to run the three loca- tions but later changed his mind. "It was more than I wanted. I didn't want to live that way anymore," he said. The hair stylists who were working at the Villages at Five Points location for Bad Hair Day? are staying on at The Med Spa, said Davison. King is planning monthly seminars, each focusing on a physical feature, such as eyes or lips. He plans to invite local businesses to join in the seminars, such as having a cosmetic dentist participate in a seminar on the smile. They will be offered by invitation only, but King welcomes those interested to call the spa for more information. Davison is back Cutting hair in Rehoboth at the salon he says started it all. Appointments with Davison can be made by calling 226-HAIR. The Med Spa at Bad Hair Day? held its grand opening Thursday, April 10. Reach The Med Spa at 644-4247. Contact Leah Hoenen at leah Leah Hoenen photo The Med Spa at Bad Hair Day? held its grand opening Thursday, April 10. New owner Dr. Kelly King, left, has been working with Bad Hair Day? CEO Drexel Davison during the change. King has expanded the services previously offered by Bad Hair Day? to include a variety of medical treatments. Energy Rodeo to help businesses address rising energy costs Participants will learn how to minimize the effect of rising ener- gy costs on their businesses by attending a new two-day seminar at Delaware Technical & Community College in Georgetown Friday and Saturdy, May 2-3. The Energy Rodeo seminar pro- vides planning and overview of energy reduction as well as dozens of tips and tricks that will help reduce energy use immedi- ately. Discussion topics include energy management programs, building an energy management program for a facility, energy con- servation, compressed air sys- tems, lighting systems, electrical systems and motors as well as energy audits and reviews. This seminar is recommended for maintenance personnel, opera- tionand manufacturing managers, energy managers and environ- mental managers at manufactur- ing plants, cofiunercial buildings, utilities, hospitals, wastewater facilities, schools, government buildings, shopping centers and office or apartment buildings. At the completion of this course, participants will return to their facility with the tools to start reducing current energy needs and implement a plan to limit its use in the future. Graduates will receive a personalized certificate of com- pletion from Delaware Tech. The Energy Rodeo seminar will be from 8:30 a.m. to 4:30 p.m., Friday, May 2, and Saturday, May 3, in the theater of the Arts & Science Center. Registration fee for the seminar is $275 and includes vendors booths, break- fast, lunch and notebook. For details or sign ups, call 854-6966.