New planned tax laws

[Tim Siocheng]

Now that we will be having a new president soon, i came across an article from marketwatch about the new real estate taxes.

https://www.marketwatch.com/story/10-biden-tax-proposals-that-will-sail-through-a-democratic-controlled-senate-and-how-to-prepare-for-them-11609958777?siteid=yhoof2

“6. Elimination of real-estate tax breaks

The Biden tax plan would:

(1) eliminate the $25,000 exemption from the passive loss rules for rental real estate losses incurred by middle-income individuals,

(2) eliminate Section 1031 like-kind exchanges that allow deferral of capital gains taxes on swaps of appreciated real property,

(3) eliminate rules that allow faster depreciation write-offs for certain real property, and

(4) eliminate qualified business income (QBI) deductions for profitable rental real estate activities. “

There’s already a thread going on about #2, but what about the other items that’s on the list?

How would these new proposed / planned tax law affect our investments?

Does it mean we will lose a lot of our real estate investment benefits and get taxed more?

I’m not sure how to interpret these new laws but i am not liking how it sounds like.

[Eamonn McElroy]

All we have on the Biden "tax plan" thus far are campaign promises that were cobbled together by various media outlets.  To do any type of immediate tax planning based on that would be a little foolish.

I tend to disagree that major tax reform will be a priority in the short-term (next 6 months).  The Biden administration will have many irons in the fire over the next 6 months.

I expect to see small tax-related bills, particularly related to COVID relief, passing through with bigger omnibus bills.  As far as longer-term, a wait and see approach is in order.

Regarding "democratic control of the Senate" -- politicians can and do cross the aisle all of the time on bills.  Moderate Democrats have been known to vote with Republicans on certain issues and vice versa.  A 50-50 split in the Senate isn't materially worse than a 51-49 majority...