this most direct impact The impact that presidents have on our daily lives is their economic policies. and as Real estate investors, these policies can determine the success or failure of our investments and even our careers.
So how might the economic and housing agendas of both candidates impact us investors?
Because I know you want to know my own “agenda” and what I’m trying to say in this post, I’m going to tell you right now that I don’t like either candidate and I will no matter who wins in November Feel unhappy. Consider me an equal opportunity hater.
I don’t have a horse for this race-but I Do Want to be prepared for headwinds That I see what each candidate will bring if they win. The thing is, these headwinds are completely Every candidate is different.
Except for one, that is. But we were a little ahead of ourselves.
Here are the real estate-related risks I see from the two leading candidates, and how to protect your portfolio from them.
Financial risks posed by Trump’s policies
Trump’s economic policies may look different, but they all have one thing in common: they are inflationary.
You don’t have to be an economist to understand that when you impose tariffs on imported products, those goods (and all products made from those parts) cost more to American consumers. and Trump loves his tariffs. He proposed imposing a blanket tariff of 60% on all imports from China and a long-term tariff of 10% on imports from other regions.
And then there’s his Proposed tax cutsits essence is to stimulate the economy. and Often, the economy does require exciting.
but you know when you overstimulation economy? inflation, Which This is something we are all too familiar with now, given the overstimulation of the economy in 2020-2021. This is something Jerome Powell and the Fed have been arguing over the past two years.
certainly, Donald Trump doesn’t like Jerome Powell. he doesn’t like Very The idea of an independent Federal Reserve and the belief that as president, he has the power to fire the Fed chairman and appoint his own. own Confidant – one World Health Organization Then he can to lower interest rates.
Don’t get me wrong: There is a time and place for tariffs, tax cuts and low interest rates. But they all come with inflation risks, and I personally There is a lack of trust in Trump’s judgment to avoid overheating the economy.
Trump’s second term as president reduces inflation risks
In the face of rising inflation risks, Investors can find refuge in real estate stocks, precious metals and stocks. Once interest rates drop again, keep an eye on fixed-rate debt investments like notes and bonds.
For real estate investment, It doesn’t hurt that Trump will almost certainly lobby Congress for an extension. bonus depreciation. It featured prominently in the last legislation he signed, the Tax Cuts and Jobs Act of 2017.
People tend to pay the going price for real estate, regardless of the situation monetary value. As for stocks, It turns out them actually Hedging against inflation very good.
have Another asset class poised to do well during Trump’s second term: Cryptocurrency. I don’t want to fall down the cryptocurrency rabbit hole – I think it’s speculation, not investing – but Trump suddenly Harmony with the Cryptocurrency Industry It turned out to be one of the surprises of the season.
Financial risks posed by Harris policies
For real estate investors, financial risks from Kamala Harris’ policies come Two directions: tax increase and tax increase Regulation.
On the regulatory front, Harris has long pursued protectionist policies toward renters. she has Calling housing a human right and proposed as a U.S. Senator rent relief act 2018 That Subsidies will be provided to renters who spend more than 30% of their income on housing. (As a renter, this sounds like an invitation go Spend more on rent and enjoy some free perks, but I digress.
Recently, the Biden-Harris White House proposed a National 5% Rent Stabilization Act. The government also funded an additional $5.5 billion program HUD prioritizes affordable housing regulations.
In short, housing regulation is expected to be enthusiastically received during a Harris presidency. Multifamily investor.
Harris has also consistently called for higher taxes on businesses and successful individuals. During the 2020 presidential campaign, she called for Increase corporate tax rate increased from 21% to 35%.
She also called for raising the top personal income tax rate to 39.6%. In addition, she also proposed a New package of 4% tax All households earning more than $100,000. oh, and Raise Medicare taxes 3.8% to 5% For high-income taxpayers.
Of relevance to real estate investors, the Biden-Harris administration has called for more than doubling real estate investment. Capital gains tax rate, up to 44.6%. oops.
The government also calls for Eliminate 1031 exchange.
Reducing regulatory risks during Harris’ presidency
Let’s start by avoiding all housing regulations that bad habit President Harris would like to add: only Don’t invest in residential rental real estate.
Pay special attention to multi-family homes. Multifamily real estate syndicate will find himself in her crosshairs if she wins the election. Small landlords with a handful of units may avoid the worst of the regulatory blitz.
Any idea what types of real estate will not be subject to her oversight? Everything else. Industrial, retail, office, factory, agriculture, short term rental-They should all be safe.
In SparkRental’s Co-Investment Club, we intend to start De-emphasis on multifamily. We’re always building more private partnerships house flipspec home construction and land flipping. We have also here we go Looking to diversify as much as possible, although we will still consider a number of multifamily deals when we meet every month Review investments together.
Lowering tax risks during Harris’ presidency
Avoiding higher tax liability is a more difficult problem to solve. You can invest in self-managing iraa or a separate 401(k) to any one Avoid taxes now, or have your investments compound tax-free with a Roth account.
That said, retirement accounts may not be safe for a Harris administration. Biden-Harris White House Proposal Reduced Retirement Account Protection For high income earners.
You can’t count on 100% bonus depreciation being extendedany one. Even so, I still look forward to “lazy 1031 exchange” arrive continue working For a passive real estate investor like me, this is great. These become easier when you invest $5,000 at a time, like we do in the Co-Investment Club, instead of the typical $50,000 to $100,000 you invest in real estate on your own.
In short, the tax landscape is likely to change dramatically. Stay informed about tax changes and set aside some time to sit down with your tax advisor to adjust your tax plan.
When in doubt, you can always Move overseas like me,use foreign income Income exclusion!
Financial risks for both candidates: Record spending
Now I’ve pissed everyone off single Let’s take it a step further by letting readers criticize their candidates’ policies: Whether Trump or Harris wins, I expect federal spending to hit record highs.
Kamala Harris has been supportive of increased spending and higher taxesas I mentioned. What about Trump? this federal government plus $7.8 trillion in debt during his first administrationhis executive actions and signed legislation are expected to cost $8.4 trillion over the next 10 years.
So no matter who wins in November, I expect the federal budget and deficit to continue to swell.
big book, This shows that taxes and inflation will be higher in the long run: higher taxes to pay for higher debt, and inflation to be higher as the government prints more money to reduce inflation. real Inflation that eliminates the value of existing debt.
and or no major Geopolitical crises over the next decadeI believe higher taxes and inflation are coming.
final thoughts
on the one hand, i believe People get too emotional in elections. do you know What could be more important than who sits in the Oval Office? your personal Many Americans undermine this relationship through political intolerance for anyone who does not share their echo chamber.
On the other hand, presidents do create policies that impact our lives. I don’t get mad because I don’t like the candidate who ultimately wins; simply Plan to adjust my financial plan.
If Trump wins, I plan to guard against overheating and inflation. If Harris wins, I will Pay close attention Tax changes and prioritizing nonresidential real estate investments over multifamily housing.
as an election getting closerour joint investment club plans to host a live seminar on this Very Topic, which dives deep into the financial impact of each candidate win. There will be policy changes in 2025 that will help get a head start in November.
No matter which candidate wins, America will not be burned. Even if you disagree with your family and friends’ political views, embrace them. Better yet, try to really understand where they come from.
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Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
