Alright, we're getting close. We're 8 of 10.
Uh, the episode 8 of 10 on the Trump vs.
Harris tax battle. This one is probably one of my favorite.
I didn't save the best for last. But it's something I just love and
it's the real estate. The impact on real estate investors,
real estate investments. Um,
property owners and we'll just dive into some of the details on that.
So as most or all of you probably know, Donald Trump is a real
estate investor. And five years ago,
a lot of the tax policy he had created or was part of then
positively impacted real estate investors and helped them.
Um, and on the other side,
the Harris, Harris is not Harrison Biden,
they've not added anything new related to real estate investors with one
exception, at least that I've been digging into recently.
And it's the low income housing tax credits.
And they haven't come out with, like, very specific proposals on this,
but, so, let's dive into it. So, Trump on one side,
we know bonus depreciation for real estate investors is a huge part of,
yeah, the tax deduction that can be created. Trump, this was,
I saw, I was just watching a video a few weeks ago.
So someone was drilling him on why he hasn't paid much in income taxes
at all, and part of his response as he mentioned that it was depreciation.
So, depreciation, of course,
for real estate is like a magical number,
you know, it's a, it's a number that is calculated at the end of
the year. It's not an, it's an out-of-pocket expense,
which is kind of the weird thing with it, that's why I call it
magical, but it's a calculation,
a calculated deduction based on the purchase price of,
of whatever real estate you bought or whatever real estate you own.
And with, under Donald Trump's plan, there is a,
an opportunity for acceleration. Accelerated depreciation.
That means instead of writing off a building over 30 years while you own
it, it's bringing a lot of those deductions up into a current year
or a five-year period. It just makes them a lot more current and it
allows, like really what it does for you as the investor.
Yeah. And when you accelerate those deductions,
it reduces your tax impact or tax burden,
like whether you've had other income to offset or you sold a property and
you need to offset the tax or the cash outflow from that,
this depreciation can help you preserve more of your cash.
And it really just, it makes it accelerates your investment.
So if that's like the main reason for it,
the main reason I like it is it allows you to preserve cash,
not have it go into taxes and you can preserve the investment and accelerate
getting into other investments. So that's one of the best things about it.
So Trump's policy specifically is we expect that the bonus
depreciation on real estate investors,
we expect it would become permanent instead of phasing down where it is now.
It's only going to be around for the next couple of years,
but it's not as beneficial as it was five years ago.
And another part, so that's the, that's depreciation part.
Another big part of what he did in 2018,
they were the opportunity zones. So opportunity zones,
these are, these are areas where state governments and the federal government,
they got together and just said, okay, there's these specific areas and in certain
states, well, they're an opportunity zone. All states, but certain areas of all states
where if you invest money, like if you bought real estate in that area,
there's some specific tax advantages to doing that.
So one, like one specific advantage is if you sell property,
actually, if you sell anything and you have a capital gain,
that's typically going to be taxed. You can roll that gain over.
This is not a 1031 exchange. This is an opportunity zone.
You can roll that gain over into real estate investment.
And there's even, there's even opportunities to invest in these zones into businesses directly
to not just the real estate part, but we'll discuss that for now.
But you can roll the gain over and you don't have to pay tax
in that year on that gain. It differs the tax now until 2026.
But we're actually, I'm expecting that that's going to be renewed.
And then one of the best parts about that is your new gain.
Once you buy that real estate, if you hold on to it for 10
years, your new gain on the growth is tax free.
Like you don't have to pay any tax on that new growth,
which is pretty amazing. So that is opportunity zone.
So on the Trump side, we've got bonus depreciation.
We expect to come back in full force at a hundred percent and make
it permanent. And the other opportunity zone. So as real estate investors,
you should know what both those are for sure. And then the,
on the Harris side, the low income housing tax credits.
So like not specifically for real estate investors,
but what I'd expect on her side is they're going to have,
I'd expect they're going to have potentially rent credits and they're going to have
some tax credits for low income individuals,
more of like, uh, helping people out that are W2 employees,
individuals, renters. Um,
but that's not really a tax credit, like for real estate investors for real
estate investors. Specifically, like what would it,
what I think maybe some of her policies could help you with probably the
low income housing tax credit. Honestly,
I, I think Trump and Harris would probably both support this,
but there are low income housing tax credits where you can offset.
Sometimes you can sometimes there's state tax credits,
sometimes federal tax credits where you can offset your tax when you are
building. It's typically in certain areas,
kind of like an opportunity zone, but in certain areas and you've got to
meet certain thresholds as far as like affordability.
Like you can't build luxury apartments. And charge $3,000 a month for a single,
like a one-bedroom apartment for the low-income housing projects and to qualify
for those tax credits, you'd have to build it to certain parameters and have
certain, uh, like limits on how much you can charge for the,
the rent in those units. So that's it.
That's it. That's it for now. We've got a couple more left.
Uh, but that is, those are my thoughts on the impact on the Trump
versus Harris tax policies for real estate investors.
