Thursday, June 19, 2008

To Sell or Not to Sell? Capital Gains Considerations is that the Question?


To sell…. or not to sell? That is the question.



If you have been following the presidential race as closely as we have, one question may be at the forefront of your mind—to sell…or not to sell? Borrowing William Shakespeare’s famous line and applying it to the world of commercial and investment real estate has made us wonder about the role capital gains tax and the outcome of the upcoming election may play in our disposition decisions and what the best avenue may be to reinvest our proceeds from investment property sales.

The volume of 1031 tax-deferred exchanges has dropped dramatically, approximately 30-50% in the last year, especially in properties less than $5 million, according to Boulder Net Lease Funds. One explanation may be that investors who once never dreamed of paying Uncle Sam are now deciding to lock in their gains, as no one is really sure when capital gains rates may ever be this low.

Regardless of whoever takes the White House in November, it seems to be a matter of time until the very favorable capital gains tax rate of 15% is set to increase.

So…if you have been philosophizing about the big question “to sell…or not to sell” you may have just found your answer. Or at least you are asking the right question along with many other investors.

For more, read the article in the Wall Street Journal, June 18th, 2008, Your Tax Bill How McCain and Obama Differ; Capital Gains Rates are likely to Rise, No matter Who Wins.
http://online.wsj.com/article/SB121374794468982701.html

National Real Estate Investor, June 2008, Taking a Direct Hit.
http://nreionline.com/finance/investors/real_estate_taking_direct_hit_0601/index.html

If we can answer questions about this posting or help you with a real estate question or decision please feel free to call Jim Gray or Nahz Anvary at NAIBT Commercial Real Estate at (916) 617-4255 or (916) 617-4257.

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