1031's May Bridge the Tax Cliff in CA
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.
Don't miss RealShare NET LEASE in New York on April 15-16.