Flipping Taxes, State Requirements, Regulations Important Issues To AAPL


Flipping taxes, state requirements for licenses, and regulations specific to the repayment of extended loans are being discussed by leaders at an advocacy group representing private lenders.

The American Association of Private Lenders was formed in 2009 and is a national organization representing the private real estate and peer-to-peer lending industry. Members include private money lenders, mortgage fund managers, brokers, and service providers, according to their website.

The organization has about 1,000 paying members and distributes educational materials to about 8,000 subscribers.

Chairman Eddie Wilson sat down recently with The Mortgage Note to talk about their public policy concerns.

Leaders at the AAPL spoke out last year when California lawmakers proposed a bill to tax nearly all residences sold within seven years of their purchase date. Of the greatest concern was a 25% capital gains tax on properties sold within three years.

Wilson said lawmakers in New York have also considered a flipping tax and he expects this kind of legislation to show up again.

“A lot of these states are moving towards what they call, generally speaking, a flipping tax. New York has introduced it. It was overturned. California has introduced it. It was overturned,” Wilson said.

If these laws are passed they would effectively end private lending activity with developers, he said.

The AAPL is active in the real estate space because a large portion of funds with private loan investments goes into real estate development, Wilson said.

Wilson said their members are also concerned about the requirements for state licenses.

Although it is a long-term issue, he said they are seeing more action on this front in recent years.

Wilson said a number of his members have a main office, and maybe a regional office, but do not have enough business to sustain a state-by-state physical presence.

Florida is an example of a state where lawmakers were trying to require a physical location for lenders. The efforts were not successful, Wilson said.

“It would hinder a lot of our private lenders from lending because really the operation from state to state has really got to fit their economic situation,” Wilson said.

Lastly, Wilson said members are concerned about the repayment of loans they may have extended at their own expense due to the pandemic. 

Wilson said the matter is being discussed in a number of states, but some industry leaders are saying it may be better handled on the federal level.

“If you really are to regulate that by state, it would be hard for anybody, period. But to regulate it on the federal level it seems like you could really create some disparity between these businesses and the types of loans they originate,” Wilson said.

Lenders can report a bill, learn about the people acting as their voice before state and federal legislatures, and read more about AAPL’s government relations efforts on their website.

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