Democrat Presidential candidate Biden wants to eliminate 1031 Exchanges for investors who have taxable income above $400k; but if this "taxable" income includes their capital gains and depreciation recapture tax on these exchanges we will see 1031 Exchanges plummet I am afraid. And this will further reduce the supply of homes for sale, causing home prices to rise even more and faster.
He also wants to prohibit 1031 Exchanges from being completed by partnerships and corporations. This would further reduce the number of 1031 Exchanges and the supply of homes for sale.
Biden also wants to nearly double the capital gains tax rate to 39.6% which would deter even more people and companies from selling their investment real estate. Thus, I expect housing supply to drop even more and prices will increase faster and faster.
We ended September with just 4,500 homes for sale with median prices rising 9.9% year over year. Imagine if this number was reduced by even 10% or 20% and I expect we would see home prices appreciating by over 12% or maybe 15% instead.
This is why I am thinking strongly that I will do 1031 Exchange on both of our rental condos this fall and winter.
Finally, Presidential Candidate Biden wants to eliminate the Step-Up Basis law in effect for assets inherited after death. This new law would apply to assets of all kinds. It's basically a Wealth Tax without calling it that.