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Everyone now wonders where do we go from here. Probably nowhere good. Start with taxes going up. That is your taxes if you are reading this. Assume for sure taxes are increasing on capital gains and there will be major limits on how deductions are calculated. We don’t know yet what this will look like or the detail, but you can be sure real estate transactions will be negatively affected. By how much is completely unclear. Returns will have to be reconsidered, tax impacts might now matter for investors. The problem is it will be a very long time before the real tax reform is undertaken and then we have no idea what that might be. It seems highly likely that a major rewrite of the whole tax code will happen over the next two years since 100% of everyone agrees the current code is ridiculous and unfair. Just remember, the Democrats think unfair means you. It may or may not also go after carried interest taxes since that was a major issue in the campaigns. If that goes, and I doubt it will, then the way funds invest may change. The real issue now is you can’t do any tax planning at all. Whatever you assume now for three years from now is wrong. Whatever deal structure you use now will not look as good in three years most likely. We simply don’t have any idea so get tax advice on how to make deals flexible with the best of what is known today. Keep an ability to modify the structure so when the tax law changes you are not locked in concrete if modification is needed.

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