Dear Landlords and Investors,
The principles of leverage, supply, demand, and ROI still push appreciation. San Diego has proven to be a wise location for your investment dollars. But, don’t become complacent. Don’t lose track of why you are investing, regardless of how successful you are. Dealing with unexpected issues can make or break your business. So of course, you’re right to want to understand how the current market affects your property values. You deserve expert guidance. Here are details on what you need to know now:
WE JUST SET THE ALL-TIME HIGH PRICE FOR A 4 PLEX IN ALL OF ESCONDIDO!
WHOO HOO!!! –$1,270,000 for 1718-21 Crofton Ln.
New administration equals new 1031 exchange laws?
Not so fast! After attending a couple of “The Future of 1031 Exchange” webinars. Here’s our take. Nobody Knows Anything and Nothing Has Happened Yet. There are no pending bills. And we all know proposals made during a campaign don’t always pass in congress.
The last significant change to the 1031 Exchange was in 2018, through the Tax and Jobs Act. Where personal property, a business, or equipment could not be exchanged. Only real estate. And before that in 2002. George W. Bush lowered the standard capital gains tax rate from 20% to 15%. Other than these two changes within the past 20 years, 1031s have been left alone.
That doesn’t mean there won’t be some changes on the horizon. Depending on the President and Vice President keeping all 50 democrats aligned. 1031 experts are predicting that NOTHING will happen this year. Plus, no other significant tax change like what’s being proposed has ever been retroactive. Meaning, if you are selling this year, go ahead and do it. Experts say that if we do see changes it won’t be until 2022.
Top Biden Campaign Tax Proposals:
• Increase Top Corporate Tax Rate to 28% (22% Now, 38.92% under Obama). Was lowered under the 2018 Tax and Jobs act. Biden wants to raise it again.
• Increase Top Individual Income Tax Rate to 39.6% on Income Above $400k (Currently 37%). Biden proposed it to go back to 39.6%. Where it was under Obama and most Democrats agree to this.
• Tax Long-Term Capital Gains & Qualified Dividends at 39.6% on Income Above $1M. Dividends from stocks, bonds, or other funds wouldn’t be taxed at a capital gains rate. Currently at a high of 20%. Biden would rather tax these to the highest income rate of 39.6%.
Again, all just proposals.
The newest change as of April 28th, 2021 was under the $1.8 Trillion American Families Plan. Biden proposed to abolish the ability to defer your capital gains on a 1031 exchange for anything above $500k.
So, if you bought for $100k and it appreciated up to $1M. Only $500k of that $900k could be exchanged. $400k would be taxed. At roughly 1/3 of your net cash proceeds. Around $120k of tax. Biden’s administration proposes a substantial change to the capital gains tax. Taxing gains that would normally be deferred.
The Pro who explained these proposals stated, in his career, he’s only seen two major scares. Both were threats of 1031s either going away or changing dramatically. They each became bills. However BOTH TIMES they were defeated.
Don’t let scare tactics or possible 1031 Exchange changes influence why you sell investment property! Selling now, at the top of the market, only makes sense when there are sound options for you. Options that allow for a successful financial exchange. Use a 1031 exchange to defer taxes, improve your cash flow, and to rewind your depreciation time frame. All the while improving your location, or position in the market, with more units.
Landlord Resources for California Property Owners
Property owners and landlords are dealing with the injustices of eviction moratoriums, rent control, and tenant welfare here in California. With little to no help from government agencies. Our state continues favoring tenant rights over the rights of the property owner and landlord.
In the video below, we cover 5 Landlord Resources for California Property Owners in 2021. Including info about:
• The Apartment Owners Association
• The California Apartment Association
• California’s COVID-19 Rent Relief through www.housingiskey.com
• The County of San Diego-COVID-19 Emergency Rental and Utilities Assistance Program
• Governor Newsom’s plan to pay rental housing providers 100% of rent owed!
• Be sure to visit our YouTube channel, San Diego Investment Property. This channel keeps you connected. We’re happy to help you navigate the income property world here in San Diego!
• Please let us know who you can refer us to. Someone you know who can use what we offer.
• Stay current with the latest real estate news and market conditions. Send your current email and phone number to lyleandlynnor@gmail.com.
• We’ll set you up for monthly neighborhood market updates and a new app called Homebot. It’s a personalized home finance tool. Homebot helps you manage your biggest asset, your home!
IT’S TIME FOR YOU TO GET THE ROI YOU DESERVE.
You’ve worked hard for what you’ve earned, and you’re right to want the best experience. Be confident you have professionals on your side. We use ROI-based marketing. Rest easy knowing we use an organized system to market your property. Employing our highly targeted and proven approach like no one else is what you deserve!
Thinking of selling your property in the next 12 months? Call us today for your strategic marketing consultation at 858-218-4511.
Send us like-minded property owners you know who want to buy or sell. We promise we will take great care of them.
