For net lease owners in California, 1031 exchanges just became a much more popular option. Due to some bold new changes in the tax code, a California resident selling a $1 million investment property in Ca. potentially faces:
- 20% capital gains
- 3.8% Medicare (due to the law just coming into effect it's still not known if this can be deferred)
- 13% State Tax in California
- 25% Depreciation Recapture
Needless to say, these higher tax rates don't exactly make California the land of Milk & Honey for property owners looking to sell their investment. As a result, investors and property owners will most likely turn to 1031 exchanges in higher degrees. With such a large threat to their investment value if they sell, it only makes sense for property owners to “continue their investment” through 1031 exchanges.
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Jonathan Hipp
Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.
