Hello, I’m Eric Odom Broker for Florida ROI Commercial Property. I just wanted to shoot a quick video to address an issue that has come up with a number of clients. It has to do with estate taxes, and there are potential changes coming to these estate tax laws and commercial real estate investors may be in the crosshairs of these potential changes. As it stands,
A significant aspect of our tax law is set to undergo a dramatic change at the end of 2025. The estate tax rules as signed into law during President George W. Bush’s administration are currently scheduled to sunset on December 31st, 2025. This means the occurrence of tax law will continue to occur. exemption threshold set at $13 .61 million as of now is set to drop by half at the stroke of midnight entering 2026.
Let’s break down what this means. Currently, individual states enjoy an exemption threshold of $13 .61 million, allowing a significant portion of wealth to be passed on to heirs without incurring a state tax exemption.
The threshold is due to be reduced, though, potentially nearly doubling the tax burden on estates exceeding this lower threshold post -2025. It’s crucial to note, however, that most individuals won’t be affected by this change, the vast majority. The exception amounts are set at levels that exempt pretty much almost all but a handful from paying estate taxes at all.
But if you’re a real estate investor, particularly in commercial real estate, this is where you need to pay close attention, particularly those high net worth of asset holders. The general size of the value of commercial real estate holdings means that commercial real estate investors are more likely to be impacted by these changes.
But drawing from history, it’s unlikely these changes will retire as per the sunset provision without any… adjustments. We can note during the Obama administration where tax laws were set to expire or extended for two years before many of the changes were made permanent.
It’s probably that we’re going to see some intervention to prevent the sunset clause from fully taking effect as it’s currently written. So why, well, our government, as we know, is terribly dysfunctional. However, high net worth individuals who would most likely be affected with a pure sunset not only vote but also contribute significantly to political parties, they’re influential, they’re an influential, powerful group. And it seems improbable that lawmakers would choose to alienate this group by allowing a drastic increase in estate taxes without considering the broader implications. And we have history on our side. to make these assumptions, as I discussed with Obama.
But what could these implications look like if the sunset did actually occur? Let’s consider the story of the Robby family, the former owners of the Miami Dolphins, who were compelled to sell assets at a steep discount to meet their federal estate tax obligations. That includes the Dolphins and Joe Robby Stadium. They became the poster child for what was wrong with the law, but a more damaging public example. Were those family farmers who owned highly appreciated land being forced to sell land under duress just to meet U .S. treasury guidelines.
These examples underscore the potential for real estate taxes to cause considerable disruption, say real estate, estate taxes for considerable disruptions, particularly with commercial real estate. A dramatic change in the estate tax landscape could indeed cause upheaval in the real estate market, but given the political and economic state, such a dramatic move seems unlikely.
What should you do if you’re concerned that this could affect you? Well, the best course of action is always to consult with your advisors, your real estate consultant, your accountant, your attorney. Together, you can strategize and prepare for the various outcomes. Well, we might not expect dramatic changes, preparing for all the eventualities is prudent. So, in closing, while the sunset of the current state tax laws could bring significant changes, the landscape is fluid and history suggests large upward tax consequence adjustments are unlikely.
Stay informed, seek professional advice and prepare wisely for the future. We thank you. you for listening and please reach out to us if you have any questions or need further guidance on how to prepare for these upcoming changes next year.
Potential Changes to Estate Tax Laws
Hello, I’m Eric Odom Broker for Florida ROI Commercial Property. I just wanted to shoot a quick video to address an issue that has come up with a number of clients. It has to do with estate taxes, and there are potential changes coming to these estate tax laws and commercial real estate investors may be in the crosshairs of these potential changes. As it stands,
A significant aspect of our tax law is set to undergo a dramatic change at the end of 2025. The estate tax rules as signed into law during President George W. Bush’s administration are currently scheduled to sunset on December 31st, 2025. This means the occurrence of tax law will continue to occur. exemption threshold set at $13 .61 million as of now is set to drop by half at the stroke of midnight entering 2026.
Let’s break down what this means. Currently, individual states enjoy an exemption threshold of $13 .61 million, allowing a significant portion of wealth to be passed on to heirs without incurring a state tax exemption.
The threshold is due to be reduced, though, potentially nearly doubling the tax burden on estates exceeding this lower threshold post -2025. It’s crucial to note, however, that most individuals won’t be affected by this change, the vast majority. The exception amounts are set at levels that exempt pretty much almost all but a handful from paying estate taxes at all.
But if you’re a real estate investor, particularly in commercial real estate, this is where you need to pay close attention, particularly those high net worth of asset holders. The general size of the value of commercial real estate holdings means that commercial real estate investors are more likely to be impacted by these changes.
But drawing from history, it’s unlikely these changes will retire as per the sunset provision without any… adjustments. We can note during the Obama administration where tax laws were set to expire or extended for two years before many of the changes were made permanent.
It’s probably that we’re going to see some intervention to prevent the sunset clause from fully taking effect as it’s currently written. So why, well, our government, as we know, is terribly dysfunctional. However, high net worth individuals who would most likely be affected with a pure sunset not only vote but also contribute significantly to political parties, they’re influential, they’re an influential, powerful group. And it seems improbable that lawmakers would choose to alienate this group by allowing a drastic increase in estate taxes without considering the broader implications. And we have history on our side. to make these assumptions, as I discussed with Obama.
But what could these implications look like if the sunset did actually occur? Let’s consider the story of the Robby family, the former owners of the Miami Dolphins, who were compelled to sell assets at a steep discount to meet their federal estate tax obligations. That includes the Dolphins and Joe Robby Stadium. They became the poster child for what was wrong with the law, but a more damaging public example. Were those family farmers who owned highly appreciated land being forced to sell land under duress just to meet U .S. treasury guidelines.
These examples underscore the potential for real estate taxes to cause considerable disruption, say real estate, estate taxes for considerable disruptions, particularly with commercial real estate. A dramatic change in the estate tax landscape could indeed cause upheaval in the real estate market, but given the political and economic state, such a dramatic move seems unlikely.
What should you do if you’re concerned that this could affect you? Well, the best course of action is always to consult with your advisors, your real estate consultant, your accountant, your attorney. Together, you can strategize and prepare for the various outcomes. Well, we might not expect dramatic changes, preparing for all the eventualities is prudent. So, in closing, while the sunset of the current state tax laws could bring significant changes, the landscape is fluid and history suggests large upward tax consequence adjustments are unlikely.
Stay informed, seek professional advice and prepare wisely for the future. We thank you. you for listening and please reach out to us if you have any questions or need further guidance on how to prepare for these upcoming changes next year.