Proposed Taxes on Real Estate

Biden's proposed taxes on Real Estate can significantly impact commercial real estate

Tax Rules on Real Estate

the Biden administration is proposing tax changes that will impact commercial real estate. Among the changes are increased income taxes. Also the following tax implications are being proposed on:

Long Term Capital Gains       1031 Exchanges    Increased Income Tax on Corporations

Lets start with the the maximum income tax rate. The current proposed income tax increase will be for individuals making more than $400,000. Tax rates will move from 37 to 39.6%.  Removing the cap on Social Security taxes , instead of the first $137,000, it will also be imposed on those making $400,000 or more



Long Term Capital Gains

Taxing long term capital gains and dividends at 39.6% on income above $1 million dollars. Presently capital gains are at 20%.


Repealing 1031 Like Kind Exchanges

Set up basis changes for inherited property

IInherited property is currently the fair market value at the time of the owner’s passing. There is no current capital gains tax on the appreciation inherent in the property at death. Biden’s plan would change this.

Itemized Deductions ,Corporate Income taxes and Estate tax

  • Itemized deductions would be capped at 28% even though the maximum tax rate is 39.6%.
  • Deductions would not affect business deductions, rental property or real estate expenses for investors.
  • Corporate income taxes increase from 21 to 28%
  • Corporations operating as a LLC or partnership would not be affected on the tax increase. However, this may trigger more audits on these types of corporations.