Impact of Biden tax plan on STR investing?

[Collin Hays]

With a Biden Presidency, taxes on on everyone making $400K a year are going up.  There is speculation that the "only" 20 percent capital gains tax will go up, and in fact, for folks making $400K a year, capital gains tax will revert to ordinary income tax which could be as high as 40 percent.

"But I don't make $400K a year". Well, if you sell a STR for $400K and your basis is $200K, you are likely now in the top bracket for that year, when you combine that gain with your personal income.

Number one, what does everyone think the practical effect on STR investing will be, if any? More demand? Less? Higher prices? Lower?

As I navigate this for myself, my strategy is simply "don't sell, but refinance".    In other words, in the low interest rate environment, rather than selling a unit for big gains, I'll just do a 75% cash-out refinance and service a 3% loan.  The loan obviously isn't capital gains or income.   

Example: I have a property that is likely worth $550K FMV today that produces about $60K a year in top line rents. My basis is around $280K. If I sold it, I would have a capital gain of $270K. Under the Biden plan, my taxes on that would likely be in the $100K range.

Instead of selling, I would do a cash-out refi: A new loan of around $450K @ 3.25% APR. So I get $450K out of the property through a "loan", thereby avoiding capital gains tax, and the rental income now services the debt (plus quite a bit more actually).

But my overriding question is, "What effect on STR investing will the Biden taxes have?"