Members Lost Big on Real Estate
Filings Show Losses on Properties in 2008
Like many property owners in a declining real estate market, Rep. Mario Diaz-Balart (R-Fla.) and his wife lost thousands of dollars when they were compelled to sell a rental unit last spring.
“We took a huge loss. We sold it for less than we owed,— Diaz-Balart said of his family’s North Miami Beach condominium.
And Diaz-Balart is not alone among his Congressional colleagues. According to annual financial disclosure reports, a number of House lawmakers sold real estate at a loss in 2008.
The financial reports include only rental, business or other real estate that produces income and not personal homes. Under disclosure rules, Members are not required to report their primary residence or even vacation or other secondary homes, so long as no portion of those properties is rented out.
In Diaz-Balart’s case, the condominium — which his financial disclosure for calendar year 2006 showed rental income from $5,000 to $15,000 annually, but no income in 2007 — sat vacant after a previous tenant left, ultimately prompting the lawmaker and his wife to list the unit for sale.
Diaz-Balart noted that at the time, the couple had two additional house payments, including their Florida home, and could no longer afford the condominium mortgage as well.
“We couldn’t even rent it,— Diaz-Balart said. “It was for sale for a long, long time.—
In previous financial reports, the condominium, which is owned by Diaz-Balart’s spouse, is valued at $100,000 to $250,000 — disclosure forms ask Members to list value in broad ranges — with a mortgage in the same amount. His most recent financial disclosure report shows a sale in March 2008 worth $100,000 to $250,000, and notes the mortgage was paid off.
According to the National Association of Realtors, which tracks sales, existing home sales of single-family homes, town houses and condominiums dropped more than 19 percent in March 2008, when Diaz-Balart sold, compared with the same time the previous year.
Similarly, Rep. Elton Gallegly (R-Calif.) sold real estate at a loss in 2008, according to his office.
The Californian, who owns several rental properties with his wife, purchased a Simi Valley, Calif., home in fall 2007 for between $250,000 and $500,000, according to a previous financial disclosure report.
The Galleglys sold the same home in April 2008 for between $250,000 and $500,000, listing no profit and no rental income from the property in his most recent financial report.
A Gallegly spokesman said the home sold for an $18,000 loss.
Rep. Stephanie Herseth Sandlin (D-S.D.) also reported selling a Marshall, Texas, home for between $250,000 and $500,000 but did not list any income from the sale.
“I can confirm that there was not a profit on the sale of the home,— Herseth Sandlin spokesman Russ Levsen said. The home, which is owned by Herseth Sandlin’s husband, ex-Rep. Max Sandlin (D-Texas), is listed in Herseth Sandlin’s previous financial disclosure with a value of between $250,000 and $500,000, but no rental income is listed.
Although lawmakers are required to report profit from the sale of real estate that generates income, the financial reports do not require the disclosure of losses from property. Instead, lawmakers mark a box that indicates “none— in the income section and list the total amount of the sale in another section of the report.
Together with the wide ranges of values and transactions listed on the forms, the reports give almost no indication of a shortfall’s size when a Member loses money in a sale.
Rep. Ed Whitfield (R-Ky.) reported selling “commercial real estate— in Huntington Beach, Calif., in January 2008 for between $250,000 and $500,000, but he did not report any income from the transaction.
The same property is listed in his prior-year financial disclosure with a value of between $100,000 and $250,000 and annual rental income worth $5,000 to $15,0000.
Whitfield also reported the sale in February 2008 of two Temecula, Calif., real estate investments for between $250,000 and $500,000, but he did not report any income from the deal.
Those properties are listed separately in his previous financial disclosure, with values of between $250,000 and $500,000 and $100,000 and $250,000, respectively. Both properties list rental incomes between $201 and $1,000 annually.
In addition, Whitfield reported the sale of Newport Beach, Calif., real estate for between $250,000 and $500,000 in January 2008, without any income from the sale.
The property was valued in his previous report at between $100,000 and $250,000 with annual rental income of $15,000 to $50,000.
Whitfield’s office did not respond to a request for comment before press time.
Rep. Harry Teague (D-N.M.) also listed two “rental properties— — with no identifying information, although House-issued instructions for financial disclosure forms indicate Members must list “clear information … including the nature of the holding and its location— — sold in January 2008 for between $100,000 and $250,000, but with no income from the sale.
A Teague spokeswoman said the real estate comprised a home and additional land, and was sold as a single unit.
In his previous financial disclosure report, which covered January 2007 to May 2008, Teague listed two Hobbs, N.M., rental properties, valued at between $500,000 and $1 million, and $50,000 to $100,000, with rental incomes of $2,500 to $5,000 each.
In the meantime, at least one lawmaker still hopes to unload property.
Rep. Virginia Foxx (R-N.C.), along with her spouse, lists four Banner Elk, N.C., homes for sale.
A spokesman said the properties are valued in the financial disclosure reports based on the asking price sought by Foxx and her husband, with one property listed at between $50,000 and $100,000 and three at between $250,000 and $500,000.
A real estate listing for one of the properties features a two-bedroom, two-bathroom log cabin near the Watauga River.