The brand-new tax law is expected to benefit those who purchase properties as investments in 2018. Specifically, it should help those investors with high net worth who are interested in completing real estate transactions in Virginia and other parts of the United States. One aspect of the tax law that is a boon for these investors is retaining 1031 real estate exchanges.
Based on the Internal Revenue Code’s Section 1031, taxpayers can defer liability related to federal income taxes and capital gains associated with exchanging certain kinds of property. Those with high net worth may be happy to hear that lawmakers did not eliminate these exchanges in the same way they did for other forms of personal property, such as aircraft. The new tax law restricts 1031 to real estate.
As a whole, real estate is likely the best way for investors with high net worth to benefit from the new law. Still, many questions exist regarding the law. As a result, consulting a tax expert may be beneficial before updating any of one’s strategies for investing in real estate.
According to experts, the fact that those with high net worth are expected to invest more in commercial real estate is a good sign for the real estate market as whole. After all, real estate prices for commercial property would likely have stalled this year otherwise due to rising interest rates as well as decreasing cap rates. However, navigating commercial real estate transactions can be complicated no matter what one’s net worth may be. An attorney can provide the guidance necessary to complete these transactions effectively and efficiently in Virginia.
Source: nreionline.com, “New Tax Laws Likely to Increase HNW Investment in Real Estate“, John Egan, Jan. 24, 2018