Podcast: What’s Ahead for Tax Changes in 2021

Location Cubed

Key Points: 

• Potential tax changes make it harder to plan for the following year.
• The infrastructure bill could lead to higher corporate taxes.
• Changes in capital gains could impact real estate traders.

April 16 has traditionally been a day of celebration for tax professionals, but not in 2020 or 2021. As a result of the pandemic, the government delayed Tax Day. This delay and uncertainty about possible tax code adjustments are the topic for Weaver Beyond the Numbers, Real Estate Edition hosts Howard Altshuler, Partner-in-Charge, Real Estate Services for Weaver, and Rob Nowak, Partner, Tax Services for Weaver.

“The extension deadline is compounding things for tax planning, and we can’t provide definitive guidance,” Nowak said.

“Because we don’t know what’s going to happen,” Altshuler added.

The unknowns revolve around the Biden administration’s infrastructure bill, which would change the corporate tax structure.

“The corporate tax increase isn’t set, but there was an alternative infrastructure bill that would be paid for by users,” Altshuler commented.

Nowak explained how this could impact real estate. “The 1031 exchanges are good for real estate, but the Biden proposals could increase capital gain rates for high earners at either more than $400,000 or $1,000,000.”

More changes could be ahead, as well, including estate tax changes and deduction options. “There could be an overall limitation on deductions,” Altshuler added.

Nowak noted that one solution could be the opportunity zone. “You could defer and eliminate a portion of capital gains into opportunity zones, which focus on rebuilding in economically depressed areas.”

Subscribe to the Beyond the Numbers podcast on Apple Podcasts and Spotify for the next episode of this series.

Learn about upcoming real estate webinars and subscribe to Weaver’s event invite list.

©2021