A new presidential administration and Democrat-controlled congress could mean significant changes for real estate investors over the next four years. Some of the policy issues mentioned in President Biden’s campaign promises and which real estate investors must watch closely include higher income taxes for top earners, increases to the corporate tax rate and the capital gains rate, and reforms to the tax benefits investors can currently realize from Section 1031 like-kind exchanges and investments in qualified opportunity zones. More specifically, Biden’s plan calls for real estate investors with income above $400,000 to be exempt from 1031 tax deferrals on sales of investment property when sales proceeds are reinvested into another property for real estate investors with incomes above $400,000.
While some investors will be extremely cautious and look to accelerate property sales to take advantage of current tax laws, others will be more patient, especially with 1031 exchanges which do not currently rise to the administration’s list of priorities during the first year. Moreover, the administration recognizes that any significant modifications to 1031 exchanges, which have been a part of the tax code for nearly a century, would have negative implications on the greater economy, which is struggling to stay afloat during the pandemic.
With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email firstname.lastname@example.org.