Written by: Samantha Guarderas
With the presidential election today, many issues are being brought to the surface regarding taxes and investments. Regardless of who will become the next president, it is likely that an investment surtax will begin on New Year’s Day and will affect thousands of real-estate investors. These real-estate investors are referred to as “passive investors” due to their involvement being mainly part-time. However, they have continued to contribute to real estate and the housing recovery. The ultimate goal for the tax is to pay for the law through raising funds. According to WSJ, those that are said to be affected the most are, “High-paid professionals…a group that includes many doctors, lawyers, dentists and those who work in finance—make up a large percentage of those expected to get snagged under the new law”.
The tax will be relevant to single individuals whose net income surpasses $200,000 and $250,000 for married couples. Despite this tax increase, many of these high-paid professionals/investors who contribute to real estate part-time, claim that they will pay the tax. They feel that the tax is not a big enough reason to back out of investments. Their reasoning? They feel there are limited investments out there that have the profit and benefits of investing in real estate. The main way to exempt this tax is having people confirm that they spend over 500 hours a year overlooking and running their properties. Many of these high-paid professionals will be unable to meet this demand because they work their own full-time jobs and as a result, will be unable to meet the requirements under this code. It will be interesting to see how this all plays out and what the New Year will bring.
