Real Estate and Tomorrow’s Taxes
Real Estate is a core part of many Americans’ financial portfolios. Whether it’s a Condo, a home, rental properties or commercial property, most of us have ownership in some type of real estate.
However, as a financial vehicle, real estate can be fickle. It can provide equity and security during good economic times and become a liability and loss when the market turns south. While residential real estate has experienced a boom in many of our cities and communities, commercial real estate such as in the hospitality and entertainment sectors have suffered greatly resulting from an invisible enemy, the Covid Virus. In sum, its very hard to predict the ups and downs.
Many famous people including our recent past President have well over 70% of the fortunes in real estate, largely because of the tax favored treatment during ownership and planning to pass it along to their Heirs free of taxation.
The 2022 fiscal year for the federal government begins on October 1, and President Biden has revealed what he’d like to spend, starting then. He would like the federal government to spend $6 trillion in the 2022 fiscal year, and for total spending to rise to $8.2 trillion by 2031. That would take the United States to its highest sustained levels of federal spending since World War II.
By 2028, when Mr. Biden could be finishing a second term in office, the government would be collecting more tax revenue as a share of the economy than at almost any point in last 100 years.
Hundreds of financial advisors are warning of the financial dangers this will have on estate plans relying on existing tax laws remaining unchanged.
The use of current or future Life Insurance dollars change as our obligations earn out. Many have purchased the cheap as possible type of protection and are now nearing expiration at a time when it appears certain it will again be needed. Before you refuse or retire the asset of Life Insurance, review them and see how they can be extended to help pay new taxes on your real estate assets you sell or passed along at a profit. I have near 50 years doing this the right way, the way you would want it.