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As I mentioned in my previous video, I will share with you real estate market specific list of proposed tax changes for 2025 by the US Treasury, if approved.

1. Note buyers will need to pay attention to valuation of promissory notes. For the purpose of IRS reporting, notes should be valued at the Fair Market Value. There is some language for valuation of partial notes.

2. HUD will establish the permanent tax credits for distressed housing areas, allocatable by each state.

3. New neighborhood homes credit (NHC) provided by each state, to encourage (a) new construction for sale, (b) substantial rehabilitation for sale, and (c) substantial rehabilitation by existing homeowners who will remain in their communities.

4. Expand Low-income housing credit.

5. Biggest change for investors would be a repeal of deferral of gains from like-kind exchange (as known as 1031). New law would only allow a deferral of an aggregate amount of $500,000 for each taxpayer each year. $1,000,000 in the case of a married couple.

The proposed change will cool the real estate market from an investment perspective with 1031 exchange as strategy and will drive the market towards low income, distressed areas and state subsidized investments.

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