Ruben Conitzer, left, managing attorney at Ruben Conitzer P.A. in Miami Beach, and Joseph M. Sternberg, right, managing attorney at Sternberg Legal in North Miami Beach.
According to recent commentary by Ruben Conitzer and Joseph M. Sternberg published by GlobeSt.com's sister publication, the Daily Business Review, for real estate investors, developers and others in the industry, this election is likely to impact some of the federal tax provisions that influence the real estate economy. Here are some of the changes we may see if a President Donald Trump or a President Hillary Clinton are able to put their proposals into effect.
Income Tax
Clinton and Trump
• Carried interest: Both candidates favor ending the carried interest treatment many hedge funds and real estate syndicators receive. Current law permits hedge fund managers and others to receive capital gain treatment on income earned that is contingent on earning a profit for their investors. Either candidate's proposal would treat this income as ordinary income.
Clinton
• Fair share surcharge: Clinton wants to impose a multimillionaire surcharge that will impose a 4 percent surcharge tax on every taxpayer earning more than $5 million per year. This surcharge will effectively create a new marginal tax bracket of 43.6 percent and raise the tax on qualified dividends and long-term capital gains to 24 percent.
• Like-kind exchanges: Clinton has said that she would “limit the tax benefits of 'like-kind exchanges,' which prevents capital gains taxation on certain sales.”
• Net investment income tax pass-through: Clinton proposed to levy an existing 3.8 percent tax on income from partnerships, LLCs and other pass-through entities. While pass-through entities are not currently subject to this tax, Clinton's proposal would change that.
Trump
• Top marginal rate: Trump proposes to cut the top marginal tax rate to 33 percent.
• Standard and itemized deduction. Trump hopes to increase the standard deduction for joint filers to $30,000 ($15,000 for single filers). He would also cap itemized deductions at $200,000 for joint filers ($100,000 for single filers).
Estate Tax
Clinton and Trump
• Eliminate step-up in basis: Both candidates want to repeal a law that permits estates to increase the tax basis of assets owned by a decedent at the time of death to fair market value. Current law permits built-in gain to go untaxed simply by owning it until death. Both candidates have indicated their proposed change only affects certain high-income families.
Clinton
• Increase estate taxes: Clinton wants to raise the estate tax rates to 50 percent for estate worth more than $10 million, 55 percent for those worth more than $50 million, and 65 percent for some those worth over $500 million. She also proposed to lower the estate tax exemption.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
