2021 what is new symbol. The words '2021 what is new' appearing behind torn orange paper. Business and 2021 what is new concept. Copy space.

Understanding the Proposed Tax Plan

By: Yann Reichelt, CPA, Advisor

2021 what is new symbol. The words '2021 what is new' appearing behind torn orange paper. Business and 2021 what is new concept. Copy space.

Understanding the Biden Administration’s Proposed Tax Changes

If the Biden Administration goes through the second budget reconciliation process, there are significant tax changes expected to impact corporate, individual, and capital gains tax rate increases, like-kind exchanges, and estate and gift tax exchanges.

1031 Exchange
-Consideration of repealing this program going forward.
-Practical note: cannot retroactively make deferred gains taxable, only gains on future transactions. A strong lobbying effort is expected.

Capital Gains
-Increase from 20% to 39.6%, for AGI over $1M, but could be as low as $400k.
-Your LT capital gains would be taxed at your ordinary income levels.

Estate and Gift Tax 
-Reduce exemption from $11.7M back to $5.3M (Pre- TCJA)
-Increase tax rate to 45% (from 40%)
-Repeal the “step-up” in basis. Currently, when a taxpayer dies the estate’s assets are re-measured to their fair market value – i.e., a step up in basis.

Expected Timeline
Steps to Change Tax Law Expected Completion Date
Initial budget reconciliation process completed April 2021
House and Senate to vote on the budget and approve October 2021
Effective date for proposed tax changes January 1, 2022*
*Note: certain provisions may be effective as early as October 2021
Summary of Major Changes
Tax Law Current Proposed
Corporate tax rate 21% 28%
1031 Like-kind-exchange Allowed Repealed
Bonus depreciation for qualified property 100% 50%
Capital gains rate for AGI over $1 million 20% 39.60%
Estate tax lifetime exemption $11.7 million $5.3 million
Estate tax and gift tax rate 40% 45%
modern business center

Yann Reichelt joined The Storage Acquisition Group in 2020 serving as an analyst for storage assets nationwide.  Yann is a licensed CPA and utilizes his background in accounting and economics to research markets and provides industry reports for potential acquisitions nationwide.  Yann graduated with a Bachelor of Science degree from Virginia Commonwealth University with a double major in Accounting and Economics.  If you have further questions about selling your self-storage asset, please reach out to Yanndirectly at yreichelt@thestorageacquisitiongroup.com.