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Ordinary Tax Rate & Capital Gain Taxes changes for 2022 - Joe Biden Tax Changes - Estate tax 2022 - YouTube
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and then uh the last one that we wanted
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to talk about was i think it was the
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capital gain
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uh taxes um tell us about that how
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could that potentially uh change and and
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what can somebody do
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uh and and what advice could we give
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them in in a situation like that
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yeah so it's not only potentially
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capital gains it's potentially ordinary
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tax rates that could go up as well so
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i'll hit the ordinary tax rates first
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and then we'll get into capital gains so
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right now
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the um the maximum ordinary income tax
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rate
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is 37 on incomes for a married couple
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over 600 000
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the proposal on that is to restore the
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old tax rates which would get us back
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39.6
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as a maximum federal tax rate on incomes
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over four hundred thousand dollars
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so not only are is the the proposal
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out there to increase the tax rate but
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it's also to
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lower the tax bracket so it applies to
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more people
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so that would be one thing to consider
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is just on ordinary income so your
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ordinary income
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is your wage income your business income
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your rental income uh interest income
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things like that
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then the other side of that is capital
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gains income so capital gains income
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and the income tax rate applicable to
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capital gains
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comes into play when you've held an
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investable asset for more than one year
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so any investable asset is if you buy a
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stock
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um you own your own business and you
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want to sell it
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or in this case real estate as well so
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if you hold that
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property for more than a year the gain
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on that is taxed somewhere between 0 and
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20 percent
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depending on your other income items the
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proposal
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out there is to change and eliminate
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capital gains tax rates for
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what the what i've read right now is
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incomes over a million dollars
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so this could affect or easily affect a
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real estate investor
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where say you have a job and you make
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between husband and wife you're making
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three hundred thousand dollars in
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wages you've got another fifty thousand
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dollars in dividends
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and interest income so now you're at
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three hundred fifty thousand dollars
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well you sell a piece of real estate and
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let's say you have an eight hundred
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thousand dollar gain on that
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well if they eliminate 1031 exchange i
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can't defer that gain so i'm gonna have
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to pay the tax on that
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i had that gain to my other income
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now in that example i'm at one million
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one hundred and fifty thousand dollars
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i've just eliminated my capital gains on
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that sale of that piece of property
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and now that's all going to be taxed at
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an ordinary income tax rate
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so it's really something that people are
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going to need to think about
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when they're selling properties is what
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income is this property going to
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generate what other income do i have
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and am i going to be pushed over this
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million dollar threshold
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one article i was reading said that they
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might even drop this down to 400
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000 um and so i mean can you imagine
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almost every property in california that
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you've held for a decent amount of time
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it's probably going to have a gain that
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you're not going to be able to defer
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under 1031
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and will probably push you with your
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other income items
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into a tax bracket of over 400 thousand
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dollars of income
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and you're paying 40 on that
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throw on another 10 for the state
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and you're looking at 50 combined tax
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um so i think these things will really
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if people really need to
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consider what their plans are for real
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estate
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um coming up is this a buy and hold
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situation
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or is this something i was thinking
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about selling anyways because there
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could be the potential for
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a lot of taxes on these types of
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transactions
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where we didn't have to consider them
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before with capital gains rates i mean
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capital gains data 20 compared to a max
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ordinary rate of 39
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i mean we're doubling the federal tax on
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that transaction
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even without a 1031 exchange and this
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doesn't even bring into a consideration
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selling stocks if you're investing in
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the stock market
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and heaven forbid you have your own
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business that you've done successfully
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in
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and you want to try and sell that
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business that a lot of that
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gain when you sell your business is
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capital gain too
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um and that's all going to be taxed
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ordinary income tax rates so
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i i just don't know what's going to
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happen here in the future but
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there are a lot of potential increases
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in tax rates
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uh potentially on the horizon here yeah
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absolutely okay great
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