https://www.bloomberg.com/news/articles/2021-04-28/1031-exchange-biden-pushes-to-end-real-estate-investment-tax-break?srnd=premium&sref=KAMRWcma April 28, 2021, 5:38 AM PDT Joe Biden is taking aim at real estate investors used to buying and selling properties without having to pay capital gains taxes. The U.S. president’s new economic plan calls for abolishing the right to defer certain tax payments on property-investment gains of over $500,000, part of a broader effort to raise taxes on the rich to pay for the expansion of services including free preschool to less-wealthy Americans. Known as a like-kind or “1031” exchange, the perk allows property investors to roll the proceeds of real estate sales into future purchases without paying capital gains taxes on profits. This deferral process can theoretically continue indefinitely until the investor’s death, and if assets are passed to an heir, the capital gains tax bill is often wiped out. The strategy was projected to save investors $41.4 billion between 2020 and 2024, according to Congress’s Joint Committee on Taxation. These figures, however, don’t break down how much of this benefit applies to gains greater than $500,000. Who will the changes hit? Exclusively investors in property, such as those who own residential real estate. These can be large investors or small landlords. While the like-kind rule once applied to things like industrial equipment, Congress closed the loophole for most other industries in 2017. It’s still a much-used tactic in the property industry, including by Donald Trump’s son-in-law, Jared Kushner. But by far the biggest beneficiaries of the current rules are individuals. According to the JCT figures, this year corporations will benefit to the tune of $2.3 billion while individuals will gain $5.7 billion. Smaller-scale investors won’t be hit by the changes since the provision, sometimes referred to as a 1031 exchange because of its tax code designation, would continue to be allowed for proceeds below $500,000. Mike Berney is one. The 57-year-old from Hudson County, New Jersey, is the regional director of Liberty Realty. He bought two studio condos in Jersey City for $72,000 in 2004. In 2019, he sold one for $250,000 and in 2020 the other for $255,000. Taking into account some refinancing, he netted roughly $140,000 in equity on each, then used the proceeds to buy two condos in Asbury Park and two in Union City. He says the purchases would not have happened without the capital gains break, and he’s skeptical of tweaking the benefit. “It’s the best way for an individual to build equity,” Berney said. “It’s a shame that the politicians wrongly portray 1031 exchanges as a tax loophole for the wealthy.” The president’s proposal — called the American Families Plan — also includes a proposal to axe private equity’s most lucrative tax break. The break treats compensation from carried interest — which for some managers can add up to millions of dollars — like capital gains, which are taxed lower than wages at the top marginal income rate. This break is often tied to property projects. How controversial is the change? The tax break has vocal supporters. It’s been part of the U.S. tax code since 1921 and originally covered such situations as when two farmers exchanged livestock. Proponents argue it is a vital tool for small businesses that allows them to upgrade to facilities that better fit their needs without facing big bills. A 2015 study by academics David C. Ling and Milena Petrova argued removing the tax break could have negative consequences, including reducing liquidity in the market because holding periods would increase. They also suggested real-estate investment would decrease, property prices would fall in the short-term and rents would rise in the longer term. What’s the case for reform? Simply put, that it unfairly benefits wealthier Americans who can afford to make large investments. Middle-class families, meanwhile, are never likely to own many assets outside their own homes and 401(k)s. The left-leaning Institute on Taxation and Economic Policy argues the tax break has expanded far from its original intention of supporting small-scale transactions and now involves an industry of brokers who find qualifying properties to insert into the deal. In a 2019 paper, the institute explained how a trade of Midwestern farmland for a Florida apartment could be considered a like-kind exchange. Will it pass? The proposal is part of Biden’s wider plan, which includes a range of new social spending, from paid medical leave to tuition-free community college. Some Democratic lawmakers are already urging him to go further and include new health care benefits, whereas some from high-income states are likely to be concerned at some of the proposed tax increases. With the Republicans unlikely to back the bill and the Democrats with only a narrow majority in Congress, the vote on the overall package could be tight. If it passes, when would the rules change? There’s no date set yet. Bear in mind that when major tax changes occur, they often contain grandfathering arrangements so they don’t apply retrospectively.
How Biden Would ‘Step Up’ Taxes on Inheritances April 28, 2021, 2:00 AM PDT https://www.bloomberg.com/news/articles/2021-04-28/how-biden-would-step-up-taxes-on-inheritances-quicktake?sref=KAMRWcma Taxing wealth as it passes from generation to generation is an issue that stokes passions on both sides of the U.S. political divide. President Joe Biden is reinvigorating the debate with a plan to target a tax break that benefits recipients of inherited property. 1. What does Biden want to do? He proposes to repeal a currently allowed tax adjustment known as step up in basis. Currently, when people die with stocks, real estate and other assets that grew in value during their lifetimes, heirs who inherit those assets don’t have to pay capital gains tax on any of the appreciation that occurred under the previous owner. The purchase price of the assets, which is used to determine capital gains tax liability, is adjusted -- “stepped up” -- to the current market value. No taxes are paid at death, and the eventual tax bill is much lower when the heirs finally sell the assets. 2. What would repealing step up in basis mean? It would mean that heirs would have to pay tax on unrealized gains passed on by the prior owner at death on all sorts of assets, which would amount to a massive increase in their liability. Under Biden’s plan, step up in basis would still exist but only for gains less than $1 million (or $2.5 million per couple when combined with real estate exemptions). 3. Why repeal it? The Biden administration and Democratic lawmakers say it primarily benefits wealthy households. Lily Batchelder, Biden’s nominee for the top tax job at the Treasury Department, and David Kamin, deputy director of the White House’s National Economic Council, published a paper in 2019 that said nearly 40% of the wealth of the top 1% comes from accrued and unrealized capital gains, citing data from the Federal Reserve Board. They also said the top 1% holds about half of all such unrealized gains. The Joint Committee on Taxation estimated that the tax break for capital gains at death will allow taxpayers to save almost $42 billion this year. 4. Who supports the change? Democratic senators led by Chris Van Hollen of Maryland introduced a proposal in March to eliminate the step up in basis with a $1 million exemption, similar to the Biden plan. The senators said the exemption was needed to protect small family farms and businesses -- a nod to arguments often raised by opponents of taxes on estates and inheritances. Biden’s plan adds to this by proposing family-owned businesses and farms wouldn’t have to pay taxes when given to heirs who continue to run the business. 5. Where does this fit into Biden’s larger tax plan? According to an estimate by the Penn Wharton Budget Model, other aspects of the Biden plan won’t work as intended if step up in basis isn’t eliminated. Here’s the logic behind that thinking: On its own, Biden’s plan to almost double the capital gains tax rate on top earners would actually decrease, rather than increase, federal revenue by $33 billion over 10 years, because investors would exploit every possible loophole to avoid paying the tax. But if the boost in the capital gains rate is paired with the elimination of step up in basis, it would raise $113 billion over the same time period. 6. Will Biden’s changes get enacted? Not without a fight. Groups that generally oppose the estate tax are expected to come out in full force against the plan. One such group, the Family Business Estate Tax Coalition, has already commissioned a report by EY that concluded eliminating the step up in basis adjustment would reduce jobs and U.S. gross domestic product.
Joe Biden is taking aim at real estate investors used to buying and selling properties without having to pay capital gains taxes. The U.S. president’s new economic plan calls for abolishing the right to defer certain tax payments on property-investment gains of over $500,000, part of a broader effort to raise taxes on the rich to pay for the expansion of services including free preschool to less-wealthy Americans.
Known as a like-kind or “1031” exchange, the perk allows property investors to roll the proceeds of real estate sales into future purchases without paying capital gains taxes on profits. This deferral process can theoretically continue indefinitely until the investor’s death, and if assets are passed to an heir, the capital gains tax bill is often wiped out. The strategy was projected to save investors $41.4 billion between 2020 and 2024, according to Congress’s Joint Committee on Taxation. These figures, however, don’t break down how much of this benefit applies to gains greater than $500,000.
Who will the changes hit? Exclusively investors in property, such as those who own residential real estate. These can be large investors or small landlords. While the like-kind rule once applied to things like industrial equipment, Congress closed the loophole for most other industries in 2017. It’s still a much-used tactic in the property industry, including by Donald Trump’s son-in-law, Jared Kushner. But by far the biggest beneficiaries of the current rules are individuals. According to the JCT figures, this year corporations will benefit to the tune of $2.3 billion while individuals will gain $5.7 billion. Smaller-scale investors won’t be hit by the changes since the provision, sometimes referred to as a 1031 exchange because of its tax code designation, would continue to be allowed for proceeds below $500,000. Mike Berney is one. The 57-year-old from Hudson County, New Jersey, is the regional director of Liberty Realty. He bought two studio condos in Jersey City for $72,000 in 2004. In 2019, he sold one for $250,000 and in 2020 the other for $255,000. Taking into account some refinancing, he netted roughly $140,000 in equity on each, then used the proceeds to buy two condos in Asbury Park and two in Union City. He says the purchases would not have happened without the capital gains break, and he’s skeptical of tweaking the benefit. “It’s the best way for an individual to build equity,” Berney said. “It’s a shame that the politicians wrongly portray 1031 exchanges as a tax loophole for the wealthy.” The president’s proposal — called the American Families Plan — also includes a proposal to axe private equity’s most lucrative tax break. The break treats compensation from carried interest — which for some managers can add up to millions of dollars — like capital gains, which are taxed lower than wages at the top marginal income rate. This break is often tied to property projects. How controversial is the change? The tax break has vocal supporters. It’s been part of the U.S. tax code since 1921 and originally covered such situations as when two farmers exchanged livestock. Proponents argue it is a vital tool for small businesses that allows them to upgrade to facilities that better fit their needs without facing big bills. A 2015 study by academics David C. Ling and Milena Petrova argued removing the tax break could have negative consequences, including reducing liquidity in the market because holding periods would increase. They also suggested real-estate investment would decrease, property prices would fall in the short-term and rents would rise in the longer term. What’s the case for reform? Simply put, that it unfairly benefits wealthier Americans who can afford to make large investments. Middle-class families, meanwhile, are never likely to own many assets outside their own homes and 401(k)s. The left-leaning Institute on Taxation and Economic Policy argues the tax break has expanded far from its original intention of supporting small-scale transactions and now involves an industry of brokers who find qualifying properties to insert into the deal. In a 2019 paper, the institute explained how a trade of Midwestern farmland for a Florida apartment could be considered a like-kind exchange.
Will it pass? The proposal is part of Biden’s wider plan, which includes a range of new social spending, from paid medical leave to tuition-free community college. Some Democratic lawmakers are already urging him to go further and include new health care benefits, whereas some from high-income states are likely to be concerned at some of the proposed tax increases. With the Republicans unlikely to back the bill and the Democrats with only a narrow majority in Congress, the vote on the overall package could be tight. If it passes, when would the rules change? There’s no date set yet. Bear in mind that when major tax changes occur, they often contain grandfathering arrangements so they don’t apply retrospectively.
April 28, 2021, 2:00 AM PDT https://www.bloomberg.com/news/articles/2021-04-28/how-biden-would-step-up-taxes-on-inheritances-quicktake?sref=KAMRWcma Taxing wealth as it passes from generation to generation is an issue that stokes passions on both sides of the U.S. political divide. President Joe Biden is reinvigorating the debate with a plan to target a tax break that benefits recipients of inherited property. 1. What does Biden want to do? He proposes to repeal a currently allowed tax adjustment known as step up in basis. Currently, when people die with stocks, real estate and other assets that grew in value during their lifetimes, heirs who inherit those assets don’t have to pay capital gains tax on any of the appreciation that occurred under the previous owner. The purchase price of the assets, which is used to determine capital gains tax liability, is adjusted -- “stepped up” -- to the current market value. No taxes are paid at death, and the eventual tax bill is much lower when the heirs finally sell the assets. 2. What would repealing step up in basis mean? It would mean that heirs would have to pay tax on unrealized gains passed on by the prior owner at death on all sorts of assets, which would amount to a massive increase in their liability. Under Biden’s plan, step up in basis would still exist but only for gains less than $1 million (or $2.5 million per couple when combined with real estate exemptions). 3. Why repeal it? The Biden administration and Democratic lawmakers say it primarily benefits wealthy households. Lily Batchelder, Biden’s nominee for the top tax job at the Treasury Department, and David Kamin, deputy director of the White House’s National Economic Council, published a paper in 2019 that said nearly 40% of the wealth of the top 1% comes from accrued and unrealized capital gains, citing data from the Federal Reserve Board. They also said the top 1% holds about half of all such unrealized gains. The Joint Committee on Taxation estimated that the tax break for capital gains at death will allow taxpayers to save almost $42 billion this year. 4. Who supports the change?
Democratic senators led by Chris Van Hollen of Maryland introduced a proposal in March to eliminate the step up in basis with a $1 million exemption, similar to the Biden plan. The senators said the exemption was needed to protect small family farms and businesses -- a nod to arguments often raised by opponents of taxes on estates and inheritances. Biden’s plan adds to this by proposing family-owned businesses and farms wouldn’t have to pay taxes when given to heirs who continue to run the business. 5. Where does this fit into Biden’s larger tax plan? According to an estimate by the Penn Wharton Budget Model, other aspects of the Biden plan won’t work as intended if step up in basis isn’t eliminated. Here’s the logic behind that thinking: On its own, Biden’s plan to almost double the capital gains tax rate on top earners would actually decrease, rather than increase, federal revenue by $33 billion over 10 years, because investors would exploit every possible loophole to avoid paying the tax. But if the boost in the capital gains rate is paired with the elimination of step up in basis, it would raise $113 billion over the same time period. 6. Will Biden’s changes get enacted? Not without a fight. Groups that generally oppose the estate tax are expected to come out in full force against the plan. One such group, the Family Business Estate Tax Coalition, has already commissioned a report by EY that concluded eliminating the step up in basis adjustment would reduce jobs and U.S. gross domestic product.
每年度政府可以通过 用财政预算来通过法案， 这个不需要参议院多60票， 只要50票就可以了。。。
现在的问题是各怀鬼胎。。。。
我个人觉得step-up 取消， 对任何有增值资产的人都收税，但是要结合取消遗产税 才是真的比较公平。。。
我不关心共和党议员怎么投票，就像看看民主党议员怎么投，纾困法案不是绕过共和党过了吗？对解决贫富差距，要打击富豪喊的最响亮的就是民主党了，还有那一堆堆时不时要来个签名信呼吁给自己加税的富豪现在也没见吭声。一大批超级富豪都是民主党的捐款人，要我相信民主党真心想动大富豪们，还真有点难
超级富豪会有量身定制的loophole的，躲不掉的是中产
年入过一百万的 在湾区也不是普通人了吧
工资单上100万拿到手已经砍一半了，最多算上中产吧