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1031 Exchange | How Ending The Will Affect Investors

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There was an article that we’ve read from Bloomberg, and it said that Joe Biden was targeting a $41B tax break for different real estate investors. It didn’t even include any talks about ending the 1031 exchange. However, this wasn’t something that you would see coming, say five years prior.

Although, these days, it’s true. Biden and his administration have been out to raise their taxes dramatically so that wealthy entrepreneurs and investors would have to pay more.

This is Biden’s newest tax opportunity hatchet, but how should every American respond to this?

There was another statement in that same Bloomberg article. It claimed that Biden is aiming at real estate investors who are used to buying and selling properties without paying a single dollar in capital gains tax.

This is under the United States President’s new economic plan. He calls to abolish the right to defer different tax payments on other property investment gains of over $500,000.

Sure, maybe the money will be redirected towards a good cause. These causes may be paying for expanding the country’s services, including free pre-school for the less wealthy citizens.

However, would this mean that the government can further indoctrinate everybody else’s children and ensure that nobody wants to go where they’re treated best?

What’s Included in the 1031 Exchange?

The 1031 exchange is a perk that allows property investors to roll the proceeds of their real estate sales into future purchases. These future purchases are permitted even without payment in capital gains or taxes on profits.

This is a deferral process that can theoretically continue indefinitely until the investor’s death. Then if these assets were passed onto an heir, the same capital gains tax bill is often wiped out.

This strategy was predicted to save investors about $41.4B between the years 2020 and 2024.

Do you know why the government and this current administration are raising taxes? Well, it’s because Biden needs that money to give away in his astounding $6T budget. In a way, he’s going to try to find every single penny that he can.

Not only that, but he knows that these billionaires and millionaires are his scapegoats. They are the ones who can eventually help him achieve this massive budget. So he’s not going to let them get away with far fewer taxes in his term.

Will the 1031 Exchange Matter to Normal Citizens?

Also, why do you think that Biden ending the 1031 exchange matters to you?

Here at Nomad Capitalist, these are the things that we’ve occasionally looked at with our tax advisers for different people who have properties overseas.

However, we happen to think that investing in the United States is a waste of time. The country has been one of my least successful markets by and large to invest in. We think that there are far greater opportunities for investing overseas. This is especially true if you’re willing to put the time and effort into doing the homework or working with someone who has. This is why we are confident that we are of great help to people in your shoes, so reach out to us now.

In the future, we think that the world will focus on the United States less and less. When we think about the people investing in a lot of these higher-yielding properties in Tennessee or Mississippi, this comes to our mind.

Some have done well and have even moved to the red states. We don’t know how long it’ll continually go on. Then again, we don’t know how many investment dollars in the world would want to go to Mississippi in the grand scheme of things.

The Country is Heading in the Wrong Direction

The thing that we’re here to talk about is the tax incentives. There’s an idea that just because of the 1031 exchange and because depreciation and specific terms exist today doesn’t mean that they’ll have to exist tomorrow.

Yes, tax laws can be changed at any given time. However, the problem in these legacy brand countries such as the United States is so simple. It’s the sole fact that the country is heading in the wrong direction.

We’ve previously shared how Elizabeth Warren and her entire ethos is talking about how anyone wealthy is supposed to be a tax cheat.

Now, did she say that outright? No.

Although, her spiels are always directed towards the wealthy and tax cheats. You’ll have to go and figure that one out for yourselves.

When this is the policy of the country you’re living in, what do you do?

You’ve got a problem, and it’s not going to be very hard to go and take a $42B tax breakaway.

Okay, we don’t know how much of that doesn’t play, in all fairness. You know that it’s over $500,000. Plus, apparently, there will still be small gains, and you can still use the 1031 exchange on those.

However, this is all pending.

Who knows how many of Biden’s tax hikes are going to make it into law? The idea that you’re continuously investing in a market that I believe has less future potential is terrible.

It’s only as good as those tax breaks that continue to exist.

Looking at Previous Administrations Prior to The 1031 Exchange

In 2017, the administration under Donald Trump took away the ability to deduct a lot for your state and local income taxes.

See, even the Republicans take away tax deductions. So indeed, Biden, who has a very ambitious plan to redistribute money, would want to earn the biggest budget of $6T.

Have you ever seen something that immense?

Where’s the money going to come from?

He’s not just planning to raise taxes from 37% to 39.6%. It’s not like capping off of Social Security the way that Bill Clinton did with Medicare. Imagine having to pay the same millions of dollars and get the same $2,000 off of your Social Security in 2073.

Does this look like the future that you want for yourselves?

Some people still think that Biden’s never going to get rid of the 1031 exchange, and maybe they’re right. Although you have to believe that this stuff they’re saying now, these are things that we never thought would happen ten years ago.

Back then, people thought that everything was going great. Naturally, the United States isn’t perfect. Although, is this still a place that you can live in?

In the last year, look at what happened with all the chaos. We’ve seen how little citizenship means nowadays. Even having a US passport meant that you couldn’t travel to many places for long periods.

Now, we see the bill come from all the chaos, and they’re going to go for stuff like this.

It might not be this thing in particular, and maybe the real estate lobby will fight against this.

The US is Not What it Once Was

However, it’s becoming increasingly difficult to fight against anyone making more than $500,000 in a deal or $400,000 a year. These are so defined in a culture that anyone making that kind of money is almost unholy in people’s minds.

They’ve done such a lousy job of managing the country over the last generation. The wages are stagnant, and as people like us realize, we can go overseas and hire smarter people with better education for either less money or on more laissez-faire terms.

Back then, Americans were used to having their great jobs and wages and their three cars in the garage.

Now, they’re angry.

In your opinion, how many people care about having incentives to invest? I think that more people than ever don’t even care if you invest because they don’t connect your investment with the prosperity of their country.

So they don’t care if you leave.

As a matter of fact, there’s something I saw during the whole Wall Street bet. People talked about speculative investments, saying they don’t care if they lose money or their entire assets. They just want to take Wall Street down.

Whether you believe in Wall Street or not, it’s on a path to get wealthy.

Now, this is part of the mindset of the people who have almost assumed that they’ll never get ahead. So they want to bring everyone down with them. They want to take the successful people down.

The Truth About Investing in the US Before The 1031 Exchange

If I’m investing in real estate in the United States, and if I’m a US citizen and a US taxpayer, then I don’t have many options.

Investing in property in some other country might be better for all different reasons.

For myself, I’m still a US taxpayer, and I either have to go to Puerto Rico, or I have to renounce my citizenship.

However, you have to better look at which one of these options would work best for you.

You can’t just leave the United States and go to Georgia and live under their tax regime. That’s not necessarily going to work for someone who’s a passive real estate investor.

This is why ending the 1031 exchange is only the beginning of your problems. Although, if you start accepting that the culture is going the wrong way, there are questions that you have to ask yourselves.

Can you see yourself living somewhere else or even investing in a different country? Maybe you can even envision yourself being a citizen somewhere else. These are some of the things that you have to think about before you ultimately decide to go where you’re treated best.

These are questions that I would ask myself if I were in that position. The great thing about this is that we have all these materials for you to check out via our website or social media. Scan through the strategies we’ve provided that maybe you can use, then ask yourselves the questions above.

I think any party can end right now under the circumstances happening in the United States and all the other western countries.


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