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The Final Straw Of Real Estate: THE 1031 EXCHANGE.
This is a section of the tax code that allows you to BUY an investment property, and then “Exchange” it for ANOTHER, MORE EXPENSIVE property in the future, without being taxed on that profit in the process.
The expectation here is that, by allowing you to “Exchange” one investment property for another, and deferring taxes in the process, it incentivizes you to consistently “Trade Up” to more expensive real estate, it re-sets the property tax basis to a higher amount when you buy something new, it increases inventory on the market, the high transaction cost supplies money back into the economy through real estate agents, escrow companies, title companies, and inspection companies, and it prevents people from just buying and holding on to property forever until they pass away.
Right now, this new tax proposal would get rid the 1031 exchange, and limit the amount that you can defer into a new property by $500,000 per transaction…where anything over that would be taxed as long term capital gains.
https://www.1031taxreform.com/ling-petrova/
However, a study was done which found that the 1031 exchange led to more liquidity on the market because owners were incentivized to sell, and THAT helped stimulate job creation, investment, and economic growth.
Like I mentioned, every time a property is sold – about 5% of the properties value goes towards selling costs, like agents, title companies, escrow companies, insurance companies, inspection companies, notary fees, and a multitude of other businesses who rely on that…and, in the process…all of THEM end up paying ordinary income tax on the money THEY make.
Second, It was also found that nearly 88% of exchanged real estate was EVENTUALLY disposed of in a taxable sale, resulting in substantially more tax being paid than would have been due had the exchange not occurred.
Not to mention, every single time a property is sold – the tax basis is re-assessed at the new value, meaning – over time – property tax revenue goes up, and the more people buy and sell – the more revenue is generated.
Property owners may also be less inclined to spend money up-keeping the property because they don’t need to maximize value, and that would lead to fewer job demand in contracting, landscaping, and so on.
It could also drive more demand for less expensive real estate, because investors would much rather get a 100% return on their money selling a $1 million dollar home that they bought for $500,000…than a 10% return on a $5.5 million dollar home they bought for $5 million.
And lastly, this could further reduce inventory on the market because investors might be less incentivized to sell, and instead…it might make more sense just to keep it, as-is.
So, even though there are some immediate benefits of reducing the 1031 exchange and generating about $41 more tax revenue over the next 4 years…the NET benefit could actually be significantly lower IF fewer people sell, and because of that, less tax revenue is generated, and fewer jobs are paid in the process.
So, I say…keep the 1031 exchange, BUT get rid of the stepped up tax basis, where heirs would pay the FULL TAX OWED at the time of passing. That way, taxes are never completely eliminated – but, they can be deferred, and then paid in the future – in full.
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doge to the moon
Sorry man but this is a huge issue that’s been going on way too long, more and more Americans are permanent renters because of how many homeowners own multiple homes by doing exactly what you are describing. This tactic has increased the prices of housing to an insane point making it harder for the average American to buy and own a home. People are working multiple jobs right now just to make it to the end of the month living paycheck to paycheck. That’s not even including the other %10 of Americans that live below the poverty line.1031 shouldn’t even exist it helps the rich get richer and the poor stay poor unless you have a ton of spare cash stashed away that you can use to toss towards a house that is.
Smashed the like button
Progressives love to complain about “ladder pullers” but sure seem to be fond of kicking ladders over themselves.
WHY DONT THEY JUST TAKE THE MONEY THEY NEED FROM THE 700 BILLION DOLLAR MILITARY BUDGET INSTEAD OF FUCKING WITH OUR TAXES
Another reason I’m going 100% doge coin.
“What’s up Graham, it’s guys here” ? 😂
just sell your properties for 200x when this happens and go buy an island and retire
you can only do that when 100+ people wanna buy your house
Taxation is plain theft at this point that is being used to make it harder to get a step ahead.
I’m confused
Agenda 21. Lockstep .was all planned since the 1970s
Most poor or even mildly rich people up in arms about this won’t need to worry about estate taxes, they won’t leave behind estates that large. Assuming there’s an exemption for say, under $2 million of total assets, i support this. But don’t tax the family home for everyone. I mean, seriously, there should be a distinction between primary residence vs investment property. A billionaire having a $10 million mansion to live in, okay, sure, don’t tax it if his kid inherits it. Until the ungrateful brat sells it anyways. But the Malibu beach house? Heck yeah tax that baby!
I think maybe a $1 million cap is more realistic. Where I live, $450k gets a 2 bedroom old run down tiny house. You need to go above half a mil for anything reasonable for a family.
I was hoping the rhetoric that Sleepy Joe was using in his campaign was just a jab at the rich “elite” real estate moguls like Donny… This will decimate the residential and commercial real estate space.
Good luck getting this through Congress. Thank God for gridlock in Washington.
So taxing everyone in the country into oblivion so we can pay for two years of free community college for students. How does that make sense? Community college is already the most affordable form of education in the country. At the state level there’s already programs in place for people who are basically in poverty. AND, most of the 1.7 trillion of student debt are from alumni with masters degrees and doctorates.
Bet no one in these comments voted biden
The first video where Graham is seriously bullshitting us
Been reading rich dad poor dad and I understand what Rob says by saying a home is a liability rather than an asset. I get this fully as people will go to the max for what they can afford and it’s a majority of their income. It’s sort of conflicting me because I’m about to buy my first property which I will be living in at first. But my plan is to then rent out this property when it has been renovated down the line. It’s quite cheap and within my budget but I’m starting to think is this going to be an asset as I thought, or is it a liability and I feel confused about where to start then if that’s the case 😂
Your intent makes it an asset! Dont let the fancy deals deter you from starting, it all starts with one property and can turn into many. That first one will allow you to build that equity and maybe use that equity to a bigger investment!
@Danny Cuevas The Santa Clarita Agent thanks for the feedback it’s appreciated 👍
Every video you do on taxes, just proved the over all problem is government overreach.
this country goin downhill bc there’s sheep who can’t wake , everything is going to change
What’s up Graham its guys here? Whoops?
So basically rich people don’t want to pay taxes and are forcing the negatives on the middle to lower class. So basically the 1031 is not the issue its the greed that many rich have. Too many people care too much about money. To be fair it seems the “middle Americans” and lower don’t have this problem with with any of this. So basically, people with money are going to keep their money?
well, its their money. not yours, not the governments.
“stick it to the rich folks” while not caring about how its gonna destroy the economy.
So taxing everyone in the country into oblivion so we can pay for two years of free community college for students. How does that make sense? Community college is already the most affordable form of education in the country. At the state level there’s already programs in place for people who are basically in poverty. AND, most of the 1.7 trillion of student debt are from alumni with masters degrees and doctorates.
Mallah’s Video: You take away my menthols & my 1031s & I got nothin’!!!
Woah that basically forces you to sell to be able to pay the tax
I hear all of this but it is really hard to feel bad for real estate investors being able to buy more and more property
You gatta think that this is everything for some people. Their whole business is built off of real estate investments which allows them to benefit others. One transaction doesnt just effect two parties (Buyer and seller) there are other business that are effected as well.
this is gonna destroy small businesses
@Danny Cuevas The Santa Clarita Agent I’m just looking at it from the low tax bracket, time buyer perspective. Never been a worse time to enter the market. In that sense it’s hard to feel bad for people who were able to take advantage of a stable market, invest heavily and diversify their portfolio. I’m not blaming them for being smart but c’mon, they are not the ones really hurting here
This is going to ruin lifelong family farms and tradition. No way we are letting this pass.
Was going to ask about this on last vid, good work Graham. It will destroy the multifamily market.
100% agree, itll really hurt the casual investor!
GRAHAM FOR SENATE!
This seems like a law the dems passed just to “stick it to rich people” with no consideration of how it would actually effect the economy…
idiots running the country.
What happens when wealth front goes under
🙂
“What’s up Graham it’s guys here!” Decaf buddy.
Whats up gram it’s guys here 😂😂😂
The stepped up tax basis is a disaster for small family businesses.
Inheritance tax makes more sense than wealth tax.
@sandeep rana yea but the government shouldn’t be allowed to take away their property or part of it.
Money included.
@sandeep rana Like tax everything, but don’t tax that at least. It just sounds like greedy government.
Like why not just deduct some money from the military budget instead.
@Yonis Said I would prefer a world without any taxes, but that’s not gonna happen. It’s better to have an Inheritance tax than a wealth tax.
@sandeep rana what about this.
No extra taxes. But everyone must pay 2.5% of their total worth(assets, money, etc)
Just 2.5% from everyone per year.
What do you think about that?
@sandeep rana wealth tax would be better for people. only a small 2.5% of total wealth.
Inheritance would only work if people were to die, or give taxable things to others, which isn’t often.
Wealth tax wouldn’t hurt anyone at all, while simultaneously building the nation, and win-win scenario for everyone.
Would make everyone happier and comfortable than the way taxes ever were in the west.
I believe golden age Muslims did it, and it worked so well, it actually shocked me learning how perfect it worked.
But those times were centuries ago, but is very possible in our times.
That’s my ideal way of tax that can create stable and exponentially growing nation.
this would just lead to a utopia-like nation judging by population growth and economy’s exponential rise.
It’s a game to get large plots of lands out of families hands and reduce investment in real estate to keep people/companies from owning multiple properties. It’s not about the money, it’s about reducing how much people have.
I only hit the like button because you ask nicely.
DOGECOIN’S PEOPLE! 🚀❤️🌙
Thank you for watching, for questions, guidance and support at any time. Just DM
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I miss Trump’s economic policies already…
Not all Americans are required to pay income tax or capital gain taxes. Only resident aliens. There are Americans and there are aliens, of course aliens should pay tax on gains to support Americans. Show me the tax form for US citizens, you can’t do it, because there is none. 1040 for is for US Individuals, individuals are aliens. You can keep paying the alien tax, your gifts are welcome. Think about it, what tax form is for aliens? 1040? or some other form. Which form is for US citizens…??? there must be one and different tax rates, we are born here, shouldnt we get a break over aliens?????????????????????????????????????????????????????????????????????????????
lol. your a meme now
Instead of making us pay tax on school. why not just deduct it from the MASSIVE military budget.
Graham, which tax code are you reading, the one for aliens or the one for Americans born here?
aliens lmao im wheezing
In Belgium you dont pay for increased value. You pay like 10% tax when buying a house.
Lower tax RATES = more tax REVENUE. Always has, always will.
The mad wrath I feel when politians even mention increasing taxes makes me want to drag out the gillioutines and let their heads roll..
whats up gram its guys here
Graham advocates raising taxes, dislike and thinking about unsub. SMH.
“What’s up Graham, its guys here” lol
I’m glad you finally took a stance, Graham! We don’t want the wishy-washy Graham. We want the resolute, opinionated Graham 😂
Don’t forget about fraudulent student loans that needs to be paid back if and only if the giv didn’t do forgiveness student debt not all of us got it
Dude ltly said… “hey Graham. Guys here”
hey Graham if y ou wanna get more likes and views maybe explain how youre generation voted in Biden and how that is fucking us. thanks
Then why are banks allowed to do mortgage swaps it’s basically the same thing maybe they should get rid of that too
I guess that three generation rule excludes the Du Pont family the airs to Morgan Stanley the airs to JPMorgan Chase Nabisco Coca-Cola Kellogg’s just find a ticker it’s been around since the 1880s and I promise you there’s a family with that money still today
Phoenix is hottest real estate in the country. My step-Daughter and son-in-law sold their home for $30,500 over asking price. As is.
Can you please react to How manny Machado spent his first million?
Chat me up directly for further assistance on earning.
Can you smell the socialism? Land should never be taxed. We will never be a free people if we have to pay taxes on land.
this is what many of y’all asked for. idk why y’all are complaining.
Disengenuis garbage. A sad attempt to keep less informed people from voting away your profit margins by vilianizing fair taxes on investors who snatch up land and property from actual families
Biased
I destroyed the like button:)
What’s up graham it’s guys here? 🤔Lol..enjoy listening to your insights. Thank you 😊
You sound like an older phinneas
About the Ford GT, can you drive around town in first gear? lol I know first gear is really tall.
You can see he doesn’t do real estate anymore.
Your math doesn’t make sense. In the first half of your example you’re saying you’d be left with 2.4m to purchase the next property, presumably because you also had a 2m mortgage and other expenses to pay. Then you say with a 1031 you’d suddenly have 5m to put in to the next property, but you’d still have th previous mortgage to pay so you’d only have 3m. Am I missing something?
Thank a Biden Voter.
What graham isn’t telling us is that the limiting of the 1031 exchange will have a DEFLATIONARY effect on property values as well because people aren’t buying and selling constantly, thus driving down demand on homes.
remember guys, Graham has an incentive to want the property values to go up. Why would he be opposed to limiting the 1031 exchange then? Because it drives down demand, and allows for more competitive pricing which will help lower income people. This will effect his bottom line
Graham for President!
Liked
There Woke left!…
Next comes there climate lockdowns.
Gràhàm Stèphàn. Unfortunately I can never read your replies, they come through as symbols and numbers. gday
What are your thoughts on the real estate market today for a first time home buyer? With inflation rebalancing… do we see a trend in another impending market crash?
Biden is a complete disaster!!!
How about talking about cutting government spending instead of preaching how the government is entitled to taking people’s money!!!
So many people apparently wtd Mr Biden .. so here we go Tax, tax, Tax, Tax…
Guess what? … They will remove the way of the poor to build wealth and keep the way of the rich to maintain wealth! That’s why I only invest in real state funds, prefer not to do it my self and go through all the hassle and have a surprise like that in the middle of the journey!
Keyword: Proposal.
Stick figure Graham is the best!
It seems like a great way to rid of intergenerational wealth
15 million have six 0 not five
Check out the way it’s done in the uk. A lot better imo, but still not perfect
👏❤
Very useful, thoughtful discussion.
See, f joe Biden
como llegue aqui?
The stepped- up is a ridiculous idea. Keep 1031 exchange. They are also abolishing the EB-5 visa program which allows overseas investors to invest millions in uS businesses whether they reside in the US or not.
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@Maze Cathy
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Find a reputable financial advisor or financial professional in your area with a proven track record and let him or her provide you options to consider with an explanation of the level of risk and the level or return you might see. If you don’t really know where to turn to find a reputable financial professional, ask wealthy people you know for recommendations.
Why the hell is it the government’s business what I leave to my kids? God I’m getting more libertarian by the day.
Graham, you don’t want to say it, so I will. Democrats want all of your money and control over everything you do. There, it’s been said. But I’m not being political, just facts.
By the way, it’s not tax free if you don’t sell. You pay property taxes. I sold my house in San Diego in April, I was paying almost $10k a year in PT. The new homeowners will be paying $15K.
So you put everything in a trust and the trust does not need to be sold, it just passes to the heirs.
1031 is a scam. Look at the Trump family. All you need to say on the matter.
I don’t get how you can have 3.2m Subs, almost 350k views and only 23k likes. Are that many people so lazy or disinterested that they can’t take the one second of effort to click an icon? Very disappointing for the quality and amount of content you produce
I would have no issue with keeping 1031 if they remove stepped up[ basis on inherited assets. Right now original owners can avoid capital gains with 1031, reduce income with depreciation then pass that on in inheritance with no taxes ever being paid. Deferral of taxes is fine, avoiding them completely is not
Couldn’t an heir pay for taxes by leveraging the inherited property rather than sell? Yes, they have to pay that debt back eventually, but that will more easily be covered by rents.
It isn’t about tax collection, it’s about wealth destruction and wealth redistribution.
😂 this is cap.
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15:00 you forgot to put that link in the description