2011 Tax Code Changes, will it benefit your Real Estate business?

Mortgage and Lending with Top Flite Financial Inc NMLS# 195600

I had such an interesting dinner at a meeting last night.  Our speaker was a world renowned economist that I had heard once before and thought he was amazing.  I just could not miss seeing him again.  He brought up some very interesting statistics.  My thoughts were going a mile a minute as to how to process all of what he was saying into positive sales results in future business transactions.

When he got to the part about the Bush Tax code running out at the end of the year and how in order for Congress to pass it at the time, they had to make it temporary (which I already knew about), I didn't realize it was expiring at the end of this year.  With so much going on, I had forgot about it.

Here are the facts:

• Individual income tax rates go from 10%, 15%, 25%, 28%, 33%, and 35% to 15%, 28%, 31%, 36%, and 39.6%.

• Child credits go down from $1,000 per child to $500 per child.

• Capital gains tax rates are going back to 10% and 20% (depending on AGI),  they are currently at 5% and 15%.

• Dividends will revert again to be taxed at the ordinary income rates (see individual tax rates above), while today they are currently at 5% and 15%.

• The current estate tax will fully be phased out and will be fully reinstated with a top rate of 60 percent and a $1 million exemption.

Looks bad, I know.  But, here come the 1031 Exchanges (for those not upside down on their mortgage).  I would think any one sitting on the fence about selling if they are going to gain from the sale would want to be alerted NOW.  Its kind of like a 2 for sale.  Get rid of the old property and get a newer one at a discounted price if you are selling out right before Dec. 31, 2010 and benefit on the tax savings too.  Look for more 1031 exchanges next year when taxes increase.

Things are not always as bad as they seem.

Comments (2)

Paul Walker
Equity Fifty Five Realty, LLC - Scott AFB, IL
Scott AFB IL Area Realtor

Good Post and advice. 1031 Tax exchanges will become more popular and commonly used.

Apr 21, 2010 05:14 AM
Grace Keng
Keller Williams Realty Cupertino - Cupertino, CA
CRS, CDPE (408) 799-8887

Thanks! If you don't do 1031 and did not live at the property loss the other tax advantage.

Grace Keng www.santaclarahomestoday.com

Mar 20, 2011 05:36 AM