Home > Blogs > Allan Kleer > South Beach Real Estate Blog

To Sell Now or Hold? (December, 2007)

By Allan Kleer

Real Estate Agent with The Kleer Team

December 13, 2007 02:03 PM

I was forwarded this article by a colleague, and it runs along the same theme that I know a lot of investors are beginning to express concern about. That theme is Democrats and what effect them taking office would have for real estate investors. One of the biggest concerns is capital gains tax. Right now, at 15%, this rate is historically low and Democrats are known for favoring taxes for the wealthy. What this potentially implies is that, should Democrats take office the capital gains tax could easily increase to 20%, 25%, or even 30% in the near future. This, combined with the fact that many economists believe that the general real estate market has not yet reached bottom, which could mean that now is a better time than ever to sell.

If capital gains tax rise in the future, any increase in property values over that time will likely be taken away by the tax. Ultimately, this may mean that making the decision to not sell now is also making the decision to not sell for the next 3-5 years.

http://news.yahoo.com/s/ap/democrats_debate

Comments(3)

Comment

Show All Comments

Sort:

Brett Noel

Keller Williams - Paso Robles, CA

I say hold em, Property values will rise, capital gains wont

Dec 13, 2007 02:14 PM

John Stauffer

John Stauffer MBA, E-pro,CRS, ABR, GRI, SRES - Battle Creek, MI

No one knows the future but I've been telling my clients if you believe that the democrats are going to take the presidency and both houses than now would probably be an excellent time to divest yourself of investment property.

Anonymous

Rebecca

When I realized I could rent a condo like mine on Ocean Drive in South Beach for between $1,400 and $1,800 a month but that to purchase one costs about $450,000-$500,000, maybe $4,500 of annual condo maintenance feees + special assessments, and perhaps another $8,500 of real estate tax I said to myself: "Ya gotta be out of your freakin mind to buy when you can rent!" Yes, there are tax breaks for owning but the discrepancy between rents and purchasing has never been this out of whack in history. Just bellpin nutso. Plus many retired or foreigners do not share the significant tax benefits of the expenses carrying purchased property that others may & that is a signficant piece of the South Beach condo market. Yah, yah you better believe I ran for the hills and cashed out. Took me a while too - many dreamers wanted my property but few could afford it. I quickly realised it had to be an all cash buyer which I inevitably secured. Even got my original asking price although I was prepared to take less.

Sorry, I can earn more off the investments on my condo proceeds than it cost to rent and I do not have to pay those pie in the sky south Florida real estate taxes or condo fees.

If you believe property will go back up, maybe wait until the upticks begin and then buy mortgage & housing isnurance related stocks, brokers, & bankers. They might jsut double & triple a lot faster than your property will go up 50% and you won't have to pay thsoe enormous carryign costs net of rents.

However, if you just want a place to live as your main home - it is a buyer's market and there are some signficant discounts to be had in various neighborhoods of south Florida. While some property is barely off 5-10% (but not moving), I have already seen some 33%-50% sales off the 2005-2006 highs. But if buying, lowball lowball lowball! The buyer got the upper hand and there are enough Floridians dying or going into assisted living or just in preforeclosure/foreclosure every day where the family will just unload push come to shove. LOWBALL LOWBALL LOWBALL and then LOWBALL some more!... and jsut do nto rely on realtors, look at For Sale by Owners too and LOWBALL LOWBALL LOWBALL! One desperate poor soul will bite too. Yes, you may feel sorry for them but if they don't sell to you they will sell to someone else and you are still taking a risk property will yet worsen as this mother of all creidt crisis can still yet worsen. Do not believe me? Just ask the Japanese who saw their property fall year after year for 19 years when their bubble collapsed!

Sellers are screwed and buyer beware! Somewhere between there is a deal for some!

Just my two cents for what it is worth!

Dec 23, 2007 09:46 AM

To Sell Now or Hold? (December, 2007)

Comments(3)

Allan Kleer

Real Estate Resources

Recent Posts

Additional Information