Are Capital Gains Tax Rates Headed Higher After 2008 Election?
Our oft reviled President Bush helped pass significant tax reduction bills in 2003 which lowered the maximum tax rate on long term (capital assets held more than one year) from 20% to 15%. Capital asset investors (stocks, bonds, real estate etc.) seem comfortable with the idea that the existing tax rates on dividends, capital gains and earned income will stick around until at least the end of 2010 — their scheduled expiration date. The odds of that occurring are, at best, 50-50 at this point.
During the recent debate between Democratic politicians, Obama indicated that he wanted to almost double the maximum tax rate on capital gains from 15% to 28%. Clinton has stated that her maximum tax rate on capital gains would be 20%. On the other side is McCain, who has recently stated his support for extending the present tax-rate structure past 2010. However, McCain voted “no” on both the 2001 and 2003 tax rate reduction bills. So realistically, the likelihood of the 15% dividend tax rate and capital-gains tax rate remaining past 2008 is perhaps less than 50-50 at this point.
For Real Estate investors, Section 1031 of the IRS tax code is one of the last bastions of legal tax reduction. As the capital gains tax rate increases, the value of doing a 1031 exchange becomes more valuable to the investor! Use our “Election Tax Calculator” to see how the election might impact your tax obligation. Embedded in Section 1031 are creative tax planning opportunities–call us (1-888-899-1031) for a free consultation. You can create a winning strategy, regardless of who wins the 2008 Presidential Election!
