President Joe Biden is asking for higher taxes on real estate transactions with gains of more than $500,000. The tax plan aims to help cover the $1.8

How Biden’s real estate tax plan may hit smaller property investors

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2021-07-12 01:30:08

President Joe Biden is asking for higher taxes on real estate transactions with gains of more than $500,000. The tax plan aims to help cover the $1.8 trillion American Families Plan, which pumps money into child care, paid family leave and education programs.  

The strategy on the chopping block — so-called like-kind or 1031 exchanges — allows investors to defer paying taxes on real estate by rolling profits into their next property. 

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"You don't have to take a haircut for Uncle Sam's share every time you move from one investment to another," said Michael Repak, vice president and senior estate planner at Janney Montgomery Scott in Philadelphia. 

Currently, investors can use 1031 exchanges to buy and sell tax-deferred real estate throughout life. If the investor holds the property until death, they can pass it on to heirs tax-free.  

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