258 – How The Biden Tax Plan Will Impact You

In this week’s episode, I will be discussing some of the major points of Joe Biden’s Tax Plan.
 
First off, most of the changes apply to those earning over $400k, even if you earn less than 400K you should know about these changes as they may impact your sellers and money partners.
 
Most of this info can from a YouTube video filmed by Ken McElroy and Ken Freeman (his CPA) which can be found at the following link: https://youtu.be/fsIYaFLYFpY
 
It’s important to note that likely nothing will change in 2021 because of the time it will take to implement the plan and have it works its way through the legal system.
 
Corporate tax rates are currently 21%, The Biden administration plans to raise them to 28%, check with your CPA to see if this applies to you.
 
The Biden Administration also plans to increase the Marginal Tax Rate from 37% to 39.6% and add a Social Security tax to those making over $400k.
 
There is talk of a $15,000 First Time Home Buyer Tax Credit.  We will have to wait to see what requirements they put forth to qualify as a first-time buyer.  I say this because in the mortgage space, “First Time Buyer” means not having bought in the last few years, but not ever.
 
There is discussion as to the elimination or modification of the 1031 Exchange program.  Does a 1031 Exchange make sense?  Ask your CPA to spell out the numbers for your specific situation.
 
Capital gains seem to be the biggest issue on Biden’s radar which allows the administration to tax the rich and give to the poor.  Again if you are not making over $400k, in my opinion there really isn’t much to worry about (yet).
 
Just because much of this may not apply to you does not mean you should not be paying attention.  It’s important to understand the goals of the administration and stay focused on changes as they reflect on capital gains to pay for these social programs that the administration is promising.
 
What can you do to prepare for next year?, First, If doing your own taxes, hire a CPA that invests in real estate.  Second, be cognizant of HOW you earn your money and more importantly how it will be taxed. Take the time to schedule a tax planning session with your CPA that is based on the current situation and be prepared to adjust as the new tax code is implemented.
 
With every rule, there is an exception (usually) therefore learn to discover the legal loopholes and apply them if applicable.
 
Generally speaking, the government’s tax code provides more ways to avoid tax than it does to apply tax, remember that.  Your job is to surround yourself with people smarter than you when it comes to taxation and building wealth.

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