 |
Linda Goold
|
ATLANTA, GA (Oct. 15, 2012) – Real estate investors could
face hefty tax increases in 2013 and need to start planning now to protect
their interests.
The latest episode
of “America’s Commercial Real Estate Show” focused on tax strategies and gave
an in-depth look at what potential tax changes lie ahead in 2013. A panel of
experts shared their insights and tips to help real estate investors stretch
their dollars and minimize their tax burden.
Experts say 2013 is
full of uncertainty and concern about taxes.
“The great mystery
is, ‘What will tax rates be in 2013?’” said Linda Goold, director of
federal taxation at the National Association of Realtors.
One of the hottest
topics is the capital gains tax. The U.S. Congress passed last-minute legislation
in 2010 to extend the Bush-era tax cuts for two more years — and now they are
set to expire again.
 |
| Ricky B. Novak |
If Congress does not
act by year end, the capital gains rate will go from its current level of 15
percent to 20 percent.
“We don’t have a
prediction right now on what Congress is actually going to do, but I think we
should prepare for the possibility of a 20 percent rate come January,” Goold
noted.
There is another
important tax increase on the horizon. Beginning Jan. 1, 2013, a new 3.8
percent tax on some investment income will take effect for individuals with an
adjusted gross income above $200,000 and couples making more than $250,000.
 |
| Michael Bull |
This new tax was
passed by Congress in 2010 to help generate an estimated $210 billion to help
fund “Obamacare” and the Medicare overhaul.
The formula by which
the tax is calculated makes it difficult for real estate investors to determine
whether they will be affected, Goold said.
Industry insiders
also are watching closely to see if Congress might try to impose tax hikes on
carried interest. Carried interest has historically been treated as capital
gains, but the U.S. House of Representatives has passed legislation four times
that would instead tax carried interest at an ordinary income rate.
Carried interest legislation has never passed the U.S.
Senate, but it is still a concern — especially if there is a Democratic sweep
of Congress and the White House in the upcoming election, Goold reports.
 |
| Anita Anand |
With the possible
capital gains tax increase and the new 3.8percent tax on investment income,
experts are bracing for a bigger tax burden overall.
“You’ve got your
federal capital gains rate, most states also have an effective tax rate and now
you’ve got this additional increase of 8.8 percent,” said Ricky Novak,
CEO of Strategic 1031 Exchange Advisors.
“Essentially, you are looking at almost a 10 percent increase on the
sale of an asset.”
With these taxes on
the horizon as 2012 draws to a close, it’s time to assess your situation and
focus on last-minute tax strategies. This means it could be time to sell
certain properties before year end.
 |
| White House, Washington, DC |
“If you’ve got a
property with a lot of gain and you know that the tax rates are going to go up
— and if they go up 10 percent that could be a huge number — you may want to
see if you have time to close by the end of the year,” said show host Michael
Bull, founder of Bull Realty Inc.
The time is right to
think about federal and state tax credits, as well as charitable contributions
— and not just cash.
“Consider donating
appreciated stock — stock that has been held for over a year — because you’re
going to get the fair market value of the deduction so you are getting full
value from the tax perspective and then you are also going to be avoiding
including the gain on that stock later on,” said Anita Anand, a senior
associate at the Reznick Group.
The entire episode
on tax strategies changing for 2013 is available for download at
www.CREshow.com.
The next “America’s
Commercial Real Estate Show” will be available Oct. 18 and will give a U.S.
office market update.
For More
Information, Contact
Stephen Ursery
Wilbert News Strategies
404.965.5026
