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Legal Ease: New Tax Proposals and Your Real Estate Planning | Entertainment

Many tax proposals being considered by Congress can have a significant impact on gifts and real estate planning for people with larger real estate. If your total real estate exceeds $ 3.5 million, you will need to meet with a real estate planner to take advantage of the gifting opportunities available under current law. Under Bernie Sanders, Senator of Vermont, the 99.5% law exemption from inheritance tax is $ 11.7 million for individuals, $ 23.4 million for couples, $ 3.5 million for individuals, couples. Will be reduced to $ 7 million. Real estate worth less than the tax exemption does not pay federal estate tax, but real estate above the tax exemption threshold is subject to a gradual increase in tax rates starting at 45%. The law also reduces the lifetime gift tax exemption from $ 11.7 million to $ 1 million, but individuals can donate $ 15,000 annually even if the gift does not count towards the lifetime limit.

Another Senate proposal is the Sensible Tax and Equity Promotion (STEP) Act. This eliminates the basic step-ups that beneficiaries receive when inheriting property. This proposal requires real estate to pay taxes on all profits that were not previously taxed. This means that if the property contains a property that has increased in value, the property will have to pay taxes on the increase. However, the law allows the first $ 1 million of valued assets to pass without tax. In addition, families who inherit farms and businesses can pay taxes in installments for 15 years. Taxes paid under the bill can be deducted from the inheritance tax.

President Biden also introduced his tax bill, including raising the capital gains tax rate to 40%. This applies only to incomes in excess of $ 1 million. Biden’s proposal also includes the elimination of basic step-ups similar to the STEP method. In addition, the proposal targets the trust of the dynasty. Highly valued income from dynasty trusts may be subject to capital gains if not recognized for the last 90 years. There are also no valuation discounts when calculating capital gains.

It’s unclear if any of these proposals will pass parliament and sign the law, but as the Democratic Party controls both parliament and the president, some changes may occur. It’s hard to plan given such uncertainties, but there are several options to consult your lawyer before any of these proposals become law:

(1) Consider creating a trust and using your current exemption to transfer your assets to the trust by the end of the year.

(2) Consider including a charity in your property plan.

(3) We will use the disclaimer of the trust that may change the provisions if there is a change in the tax law.

(4) Consider transferring fractional interest on the property by the end of the year. That way, the valuation discount may disappear.

Before taking any action, talk to your lawyer about what you can do now to protect your property from future tax changes.

The legal advice in this column is by nature general. Talk to a lawyer for advice that suits your particular situation.

Rebecca A. Hobbs, Esquire, is a Pennsylvania business license and is accredited by the Pennsylvania Supreme Court as an elder lawyer by the National Elders Law Foundation. She is the principal of the law firms of O’Donnell, Weiss & Mattei, PC, 41 High Street, Pottstown, and 347 Bridge Street, Phoenix Building, 610-323-2800, www. owmlaw.com..You can reach Ms. Hobbs rhobbs@owmlaw.com

Legal Ease: New Tax Proposals and Your Real Estate Planning | Entertainment

Source link Legal Ease: New Tax Proposals and Your Real Estate Planning | Entertainment

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