Capital Gains Tax Going Up?
February 3rd, 2010 categories: Rants & Riffs, The Market
I have been selling real estate for 27 years and it seems the general trajectory for long-term capital gains taxes has been down. In 1983, when I started in real estate, I recall a capital gains rate of 48%! According to the Wall Street Journal, the President’s new budget is proposing an increase.
“Under the budget plan, capital gains and dividends would be taxed at 20%, up from 15% now, for people at those income levels.” CLICK HERE TO READ THE WALL STREET JOURNAL ARTICLE
What impact could this have on Honolulu real estate?
1. People will be more likely to hang onto their investment properties. Believe me, for investors, the capital gains tax is a serious consideration and some will decide not to sell. This could lead to lower inventory in our market.
2. Investors will sell and complete IRC Section 1031 Tax Deferred Exchanges. An exchange allows a seller to sell and buy another property while deferring any capital gains tax they may have been due under a normal sale.
3. If the State of Hawaii proportionally increases their capital gains tax, then the overall tax burden will be even greater and the disincentive for investors to sell will increase.
Here is my editorial comment, I don’t see how raising taxes in any manner is going to improve the economy. If anything, the Feds should be looking at decreases in taxes to spur the private sector creation of jobs and opportunity.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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