While at first glance, federal and state tax rates could rise a staggering 58% for real estate investors under various aspects of post-Fiscal Cliff and other new legislation, there are ways to soften and delay that form of impact.
Woodland Hills, CA (PRWEB) February 08, 2013
In what seems to be holding up as a strong real estate market delivering relatively advantageous returns as we enter 2013, it might seem that the expiration of Bush-era tax cuts and substitution of the increased capital gains tax rates established by The American Taxpayer Relief Act of 2012 could reduce options and returns for the upper-earning investor.
“Not so,” says Kevin Levine, Executive Vice President of Peak 1031 Exchange Inc. (http://www.peakexchange.com), “While at first glance, federal and state tax rates could rise a staggering 58% for real estate investors under various aspects of post-Fiscal Cliff and other new legislation, there are ways to soften and delay that form of impact.”
Levine advises investors with an eye on long-term returns to assess both their portfolio and their sense of where the market is headed and -- if they remain committed to real estate as a channel for strong returns and inflation protection -- to investigate a 1031 exchange to protect gains to date and defer the bite of increased taxes for now. Executing a 1031 exchange allows a real estate investor to defer the capital gains taxes normally due on the sale of a property via a like-kind property exchange rather than an outright sale.
For the upper-income investor, the capital gains tax rate has increased from 15% to 20%, to which must be added state taxes in certain states as well as a 3.8% Medicare surtax on net investment income -- but under a 1031 exchange, all of these increased taxes are deferred. In fact, Levine points out, investors had already begun to come to Peak 1031 Exchange, Inc. to investigate and execute these types of transactions even before the Fiscal Cliff was averted at year’s end. “It turns out to have been a smart defensive move then,” he says, “One that, for the right investors, seems even smarter to check out right now.”
Peak 1031 Exchange, Inc.(http://www.peakexchange.com) is a leading national provider of tax-deferred 1031 exchange services, specializing in all like-kind transactions including Simultaneous, Delayed, Reverse, Improvement and Personal Property exchanges. It is part of the Peak Corporate Network (http://www.peakcorp.com), a brand representing a group of entities providing a comprehensive array of commercial and retail real estate services nationwide including mortgage lending, loan servicing, short sale services, foreclosure services, real estate brokerage and escrow services.