How Could Threats of a Change in Long Term Capital Gains Affect Real Estate?

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Filed under: Market Comentary

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As we start Q4 this year, there is a lot of talk out of Washington D.C. about a possibility of an increase in the short-term capital gains tax. It feels like a situation where there has been so much in real estate gains recently – is now the time to think about selling?

Thinking About Selling in the Next Few Years?

I don’t expect anyone to think that a 5 – 10% increase in capital gains tax should completely change your thinking in real estate. But what if you are a person who has a property and you are planning to sell it in the next few years? Then you might be thinking that now is the time to make your move. You could take advantage of the current capital gains tax now.

It will be interesting to see what happens. If the talk in Washington D.C. keeps up, then it’s likely that the capital gains tax will increase. To me, selling right now feels like the right thing to do from a tax planning perspective if the capital gains taxes will be going up. The real estate market is strong, which means it might make sense to get the house on the market so you can sell it before the end of the year.

Capital Gains Increases Could Affect the Real Estate Market

Who knows how things will play out? If the capital gains increase is coming, then we’ll see how it affects the real estate market. For what it’s worth, the market could definitely use some inventory, so I don’t see it negative for real estate. But I do see it as a potential way for individuals to save money on tax costs.

If you are in that position and trying to decide if you should sell, then do a bit of research before making your move. Talk to your CPA and reach out to me to discuss your personal situation.

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