Biden’s Proposed Changes to Capital Asset Taxes: How Could They Affect You?
By: Barry E. Haimo, Esq.
November 4, 2021
President Biden has made sweeping policy changes in a short amount of time since entering office, and some people are curious how the new reforms will affect their assets. If passed, the proposed American Families Plan would directly affect the estate planning process by raising capital-gains taxes.
Let’s examine how Biden’s capital asset taxes could affect you specifically.
Understanding Capital Asset Taxes
What exactly are capital asset taxes?
Assets that are sold for profit are subject to these types of taxes, also known as capital gains taxes. Stocks, real estate properties, and businesses can all be subject to capital asset taxes. Assets held for an extended period of time can receive preferential rates.
Historically, these assets have only been taxed at high rates if they sell. And the capital asset tax rates have been consistently lower than income taxes, currently sitting at 20%. But under Biden’s proposed plans, this will change.
Biden’s Proposed Capital Asset Taxes
In Biden’s proposed capital asset taxes plan, the top capital gains rate would increase. Additionally, assets would be taxed upon the death of their owner as if they were sold.
This will affect the amount of money and value of assets left to beneficiaries and alter the estate planning process. Wealthier Americans who have been exempt from estate taxes will feel these changes the most.
Who Will be Affected by Tax Gains Changes?
Many Americans will probably not be affected by Biden’s proposed capital asset taxes reform. But if you are one of the people who could be subject to capital gains taxes at death, you should take note and make a plan.
The plan would not only tax unrealized capital gains upon death, but raise the capital-gains rate from 23.8% to 43.4%. Even middle-class Americans could feel the effects in the stock market if they own property in an area that is booming or if they are small business owners.
For many, Biden’s proposed one million dollar exemption to the plan would hopefully protect them from being slammed with unexpected capital asset taxes.
How Can You Avoid Capital Asset Taxes?
What if you are one of the people who will be subject to the increased capital gains tax rates? You might feel anxious about this change if your generational assets that have grown in value are suddenly at risk of being taxed upon your death.
Fortunately there are ways that legal advisors can help secure your assets and avoid getting slammed by capital gains taxes. Reviewing your estate plans, donating to charities, selling and/or moving assets to accounts such as Roth IRAs can all potentially help downsize Biden’s proposed capital asset taxes.
Haimo Law uses a 4-step unique proven process for estate planning. They can help you avoid costly estate taxes and leave a legacy you can be proud of. Call us to get started today at 954-228-3369.
Barry E. Haimo, Esq.
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