In a recent post, we talked about the likely increase in the capital gains tax rate and how it would affect Chicago commercial real estate owners in a number of different scenarios. The worst-case scenario involved a further decline in commercial real estate values coupled with a rise in taxes. Well, a recent survey seems to indicate that worst-case scenario is in fact the most likely scenario.
Last week, Globest.com published the results of a Grant Thornton survey in which 93% of respondents anticipated further declines in commercial real estate values through the rest of 2009. That means it will take one hell of a bull market in 2010 to offset the tax bill commercial real estate sellers will see in 2011. We’ll go out on a limb and say that bull market ain’t gonna happen. Selling in a recession is a tough pill to swallow. Still, as Chicago commercial real estate brokers, we think unloading now makes a lot of sense for Chicago commercial property owners with a low cost basis and therefore a high exposure to capital gains taxes.
We’re actually quite surprised there isn’t more debate on this topic. Tell us what you think. Do you anticipate a rate increase? And how is it affecting your commercial real estate investment strategy? Leave a comment below.
NOTE: Image is courtesy of CartoonStock.com
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Peter Lynn & Dan Rosenberg | ||
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Building Equity Commercial Real Estate | |
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