Changes in capital gains taxes may be on the horizon.
President Biden has been talking about potentially changing parts of the capital gains tax, particularly with 1031 exchanges. This could hugely impact the real estate market, and unfortunately, it seems the impact might be a negative one.
Based on what he proposed, capital gains taxes would essentially double. We’re already having inventory issues, and the only hope we really have comes from investors. However, people don’t want to pay capital gains tax on 1031 exchanges, so this could push investors out of the market. Additionally, 82% of people who do 1031 exchanges are small business owners. So, this change isn’t affecting multimillionaires with hundreds or thousands of properties — it’s affecting families who are trying to invest.
So, if President Biden’s proposal becomes a reality, capital gains taxes would nearly double from 20% to 39.6% when people sell investment properties. It’s going to affect a lot of people, regardless of income level, who invest in real estate.
If you’ve been thinking about selling off an investment property, now may be the time to do so to avoid these steep capital gains tax hikes. If you have any questions or would like to know what these proposed changes may mean for you, feel free to reach out to me. I look forward to hearing from you soon.
