California Investors’ Guide to Navigate President Biden’s 2025 Tax Proposal

By Burt Tsuei

A Realtor with 20+ Years of proven track record of high quality service in the San Mateo County/Bay Area. A lifelong Bay Area resident, Burt works with buyers and sellers from Pacifica to South San Francisco to Redwood City and beyond. Burt is passionate about selling real estate in the mid-peninsula, and inspired by his clients’ goals and dreams. No matter what your unique needs are, whether you’re transitioning from city living or stepping up to a larger home, his mission comes straight from the heart: to protect your best interests and make your experience seamless.

If you have investment properties in California, you may need to brace yourself for upcoming changes that may affect your real estate investment. President Joe Biden has proposed a new tax plan for fiscal year 2025 that will have a significant impact on your investment properties. Today, I will talk about the three ways that the 2025 tax proposal will affect your investment and its profitability and how to navigate it:

1. Significant increase in capital gains tax rates. One of the key components of the proposal is a significant increase in capital gains tax rates. If enacted, the top federal long-term capital gains tax rate could rise to 44.6% for high-income earners. This includes a 39.6% base rate plus an additional 3.8% net investment income tax. In California, where state capital gains taxes can reach up to 13.3%, some investors could face a combined capital gains tax rate of nearly 58%.

2. Higher taxes may lead to reduced profitability. As a property owner, one of the probable impacts of higher taxes will be reduced profitability when you sell your property.

3. Higher taxes will influence the overall market. This could also impact the overall real estate market, as investors might hold onto their properties longer to avoid these taxes, potentially reducing market liquidity.

Given these potential changes, now is the perfect time to sell your investment properties. By selling now, you can lock in the current lower capital gains tax rate, maximizing your returns and avoiding the higher rates proposed in the new tax plan.

As always in real estate investing, before making any decisions, it’s best to consult your financial advisor like myself. By partnering with me, I can help you navigate these changes and make informed decisions.

So, if you’re considering selling your investment properties or if you want to discuss your options, call me at 650-274-3598 and we’ll set a schedule to develop a strategy that will fit your financial goals while taking advantage of the current tax rate. Don’t wait until it’s too late. Reach out to me today to make sure that you’re prepared for the upcoming changes. I look forward to helping you achieve your real estate goals.