Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
This has been part of the tax code since 1921 but its a perk that allows real estate investors/homeowners to roll capital gains into other real estate purchases without paying capital gains. Biden now is proposing that gains for sales of a property over $500k will now be taxed at capital gains. So how does this effect the real estate market? Investors now will stop buying multi-family homes, apartments and will start targeting smaller homes, townhomes and condos for investments. It makes sense where instead of doing a big deal investors will buy up these starter homes for rental income instead of the larger buildings so when it comes time to sell there is a tax strategy for capital gains.
Now for New Jersey where these homes already have low supply expect there to be a TON more competition and buyers for these homes.
This has been part of the tax code since 1921 but its a perk that allows real estate investors/homeowners to roll capital gains into other real estate purchases without paying capital gains. Biden now is proposing that gains for sales of a property over $500k will now be taxed at capital gains. So how does this effect the real estate market? Investors now will stop buying multi-family homes, apartments and will start targeting smaller homes, townhomes and condos for investments. It makes sense where instead of doing a big deal investors will buy up these starter homes for rental income instead of the larger buildings so when it comes time to sell there is a tax strategy for capital gains.
Now for New Jersey where these homes already have low supply expect there to be a TON more competition and buyers for these homes.
That doesn't really seem logical to me. A $500,000 tax free profit is still huge. You can buy a $1 million multi-family house and it would have to appreciate by more than 50% before your gains are taxed. I don't see how this would make someone who invests in multi-family houses want to suddenly start buying up single family houses.
i dont know how capital gains works when it comes to selling real estate. is it looked at on an individual basis or is is combined with your other capital gains you sell in a year?
That doesn't really seem logical to me. A $500,000 tax free profit is still huge. You can buy a $1 million multi-family house and it would have to appreciate by more than 50% before your gains are taxed. I don't see how this would make someone who invests in multi-family houses want to suddenly start buying up single family houses.
The tax effect disincentives real estate investors from buying larger properties (which makes up 1/3 of places where people live). It makes more sense as a real estate investor to buy smaller properties which can be sold off in piecemeal over years to avoid the ~50% tax rate, so there will be a real estate investors shift to smaller homes. As this major shift will occur demand will drive up house prices even more.
The real people who are effected by this will be First Time Home Buyers, people who have owned their homes for a long period of time and of course Real Estate Investors.
Last edited by DannyHobkins; 04-29-2021 at 12:57 PM..
I hope they can get rid of the 1031 exchanges. It is one of the most absurd tax breaks in the IRS code.
How is it absurd? You buy a house and own it for 10-20 years and it appreciates in value. You go to sell it and buy a new house, but wait now you have to pay taxes on that money when you sell your house instead of rolling it into your new house.
I keep saying it here until my face is turning blue, but we are heading to massive inflation right now. Today in the news Proctor & Gamble and Coke just announced they will be raising prices and its going to happen across the board. The Biden Administration wants to do another run with the printing presses which is just going to burn the dollar even more. That $500k cap is going to very achieve when inflation comes (and its already here).
Last edited by DannyHobkins; 04-29-2021 at 12:51 PM..
I dont think anything passes. Manchin, and Sinema will save the country
just got to hold on until the gop wins back the house, and Biden can go take more naps.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
