Now why the heck would local realtors be advised to talk to customers about the stock market? Well, obviously we at AIPIS are not suggesting you trumpet stocks from the hilltops as a sterling investment opportunity but the reality is that many people have a chunk of investment change sunk into Wall Street assets. One thing you should mention to potential real estate investors is the reality of tax code changes coming this year, which are set to see the top capital gains rate rise from 15% to 20%.

Ouch. If our math is correct, that’s a 33% increase! Seems like a great time to advise those lucky enough to have made profits in stocks to consider cashing out while the cashing is good, in other words, before the new tax rates take a bigger chunk out of your wallet. But short term penalties aren’t the only issue stock investors should be worried about. As local realtors familiar with the concepts taught by AIPIS know, rising capital gains rates tend to depress future investment in the stock market, which can lead to a stagnant market that tiptoes here and there for years into the future.

Sound like a great investment climate?

It’s not, unless you’re talking about prudent real estate through the asset known as income property. You may not be aware of a little gold mine given to real estate investors by the IRS called a 1031 Exchange. This allows you to sell a property and buy another one, abiding by certain conditions, without paying any capital gain taxes. The ultimate effect of this is that can roll your investments progressively up into larger, more expensive properties tax free! That’s why we think local realtors should stress to their customers that it’s time to get out of the stock market. That scene is over and done.

The AIPIS Team

Flickr / Jeff Sandquist