Post Election Spec Report: Policy & Taxation Changes on Real Estate

• *NEW* Pending Changes to the Tax Code:

o 1031 repeal or limitation

o Increase in capital gains taxes (from 20% to 40%; for investment real estate: from 30% to 50%)

o Elimination of step-up in basis (repeal of Section 1014)

o Raise individual personal tax rates (top marginal rate back to 40%)

o Raise corporate income tax rates (from 21% to 28%)

o Increase in estate tax; reduction of the estate tax exemption (from 40% to 45%; a reduction from $11M down to just $3.5M)

o Elimination of 20% QBI Deduction

• A brief overview of the deficit, and federal debt of $24 trillion
• Spending…$11 trillion in new spending programs:

o $1.4 trillion to expand the Affordable Care Act by bringing a “public option” and expand long-term care

o Reducing Medicare eligibility age from 65 to 60: $300 billion

o Climate and infrastructure (“Green New Deal” of sorts): $2 trillion

o Social Security & Supplemental Security Income: $1 trillion

o College, K-12 education, and pre-school aid: $1.5 trillion

o Family leave assistance: $550 billion

o “Buy America” investments: $700 billion

o Housing aid: $640 billion

o Combating opioid addiction: $125 billion

o New Child Tax Credits: increased to $3,000 per child…

• Structural changes that impact the economy (including of course real estate):

o Filibuster rule eliminated

o Two new states added to the union: DC and Puerto Rico

o Supreme Court-packing or rotations between Appellate Courts

o Elimination of Electoral College with NPV