What Biden's Latest Tax Proposals Might Mean For Real Estate Investors
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- čas přidán 20. 08. 2024
- What Biden's Latest Tax Proposals Might Mean For Real Estate Investors // If you haven’t been reading the news lately, the Biden administration has proposed some pretty significant tax changes to attempt to pay for the trillions of dollars of stimulus packages that have been passed since the pandemic began.
And unfortunately for the real estate industry, many of these changes directly target real estate investors, both active owners and operators of individual properties and commercial real estate investment firms, as well as passive investors in commercial real estate syndications and funds.
And tax law tends to incentivize behavior, meaning that significant changes to the way real estate investments are taxed could also lead to some major changes in the way real estate investors make buying and selling decisions, which inevitably affects liquidity and property values in the market.
So to help make sense of all of these proposed changes, this video will walk through three of the most impactful issues at stake under these new proposals, and the impact each may have on the real estate industry in the short and long-term.
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Research and articles referenced in this video:
www.jct.gov/CM...
www.cnbc.com/2...
www.cpexecutiv...
bangordailynew...
blog.naiop.org...
www.1031exchan....
hamiltonzanze....
www.nar.realto...
www.nmhc.org/g...
www.greenstree...
What do you think will happen to real estate if these changes end up going through?
While I think this is a real haircut to existing investors, I think the net result will be lower asset prices, which investors would welcome, because of a less favorable investment climate. At a fundamental level, subsidies create price distortions. Real estate is a heavily distorted market because of preferential tax treatment. The net result being real estate asset prices appreciating at breakneck speed. Closer to equal treatment of capital vs. labor, or at a minimum, equal treatment of investment capital vs. real estate investment capital would probably create a healthier real estate industry in the long term.
Great points and very well said, Gary. Thanks for the comment!
Hey Justin, I want to thank you for all the great content. Your videos have inspired and pushed me to start a career in CRE. I'll take the state exam in 2 weeks and start my mentorship with Marcus & Millichap next month. I'm nervous, anxious but most of all, EXCITED! Keep up the great work, I look forward to your next video!
Congrats, Mike!
Great video, Justin. In the proptech world, there's a big race to become "the" transactions platform for commercial real estate. I agree with your thesis on CRE transaction volumes declining with the passage of the proposed legislation. That said, if these assets become more liquid with a tech-simplified transaction process, tech adoption in this space could help sustain asset prices & transaction volume.
Interesting perspective, Bobby - I agree that tech is making the transaction process simpler. Even with an easier time buying/selling, it's still a tough pill to swallow to take the capital gains tax hit. Will be interesting to see how this plays out.
Justin, do you think we will see more refinancing when loan terms are coming to an end under this potential situations? How will people with commercial real estate deal with the loan terms?
Yes I do - if more owners choose to defer a sale and plan to "wait it out" to avoid a tax hit that could potentially be altered in the future with a change in policy, refinance frequency will likely increase when those loans come due. I don't see a major change in loan terms coming as a result of this, but rising interest rates are definitely still a concern for the industry as a whole.
Well explained
Thanks, Sam!
Good news for residential appraisers!!!! More work for us! Love it!
Hey Justin, great video! I had an off topic question related to your video last week. I am looking to get into equity placement and I was wondering if there were major positives or negatives between a equity placement role vs a capital markets role? If not, are they pretty transferable roles in terms of ultimate skill set of capital raising?
Capital markets can mean a few different things, but assuming you're working on the sale of assets on behalf of property owners vs. working on raising capital on the equity placement side, both are very valuable skill sets to have if you're looking to be able to raise capital in the future. Good luck!
Great explanation
Thanks, Jonathan!
I'm starting a syndication business and this is worrying. 😕
What are the benefits? You mainly spoke of the drawbacks
No benefits
💯
To me, totally fair if investors have to pay taxes to a proportion closer to that of workers. No need to cry: if your renters can live better, smaller vacancy rates for you.
everything you are just saying is so wrong. i cannot start explaining how much i disagree. it's not surprising though. you are a capitalist and you see homeownership as an investment. most people see it as simply a place to live and raise their families and they cannot afford to do that anymore because of people like you that think it's a poker game. you are only talking and speaking on behalf of landlords that are simply leeches to the society. they don't contribute anything and they exist only to make profit out of the hard labor of others. you are sitting there, crying on their behalf because they cannot continue their grift and their unethical profiteering. i am sure you will be very happy when all the moratoriums end the evictions and foreclosures start. your business will flourish!