Are you investing in real estate or planning to invest soon? The Biden Administration’s new budget proposal partially eliminates the 1031 exchange, a tax code provision that real estate investors have long used to defer capital gains taxes on property sales. This proposal may have significant implications for your real estate investments.
Here’s what you need to know:
- Under the proposed changes, the 1031 exchange would be limited to $500,000 of gains per year for each taxpayer ($1 million for married couples filing jointly).
- Any gains above this limit would be subject to immediate taxation.
- The proposed changes would only apply to taxpayers with more than $500,000 in annual gross income.
While these changes are only in the proposal stage, staying informed and being proactive in your real estate investments is important. Now may be the time to evaluate your investment strategy and consider alternative tax-deferred investment options.
At Palma Financial Services Inc., we specialize in real estate investments and tax planning. Schedule a consultation with us to learn more about how these proposed changes could affect your real estate portfolio and what steps you can take to mitigate the impact.
Don’t let the proposed changes to the 1031 exchange catch you off guard. Please schedule a consultation with us today to learn more about how you can protect your real estate investments.