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Wealth Taxes and Real Estate

Faced with challenges in how to pay for proposed multi-trillion-dollar spending plans, politicians have renewed discussions of introducing a wealth tax in the United States.

While dubbed a “billionaire’s tax” and ostensibly targeted at ultra-wealthy individuals, many investors are concerned that once a wealth tax is implemented, it will rapidly ensnare a growing number of individuals including the “not-so-wealthy.” Recall that the original Federal Income Tax, ratified in 1913, started with a tax of only 1% on incomes greater than $80,000+ in today’s dollars resulting in only 3% of the population owing taxes at the time.* 

For reasons discussed in this blog, owners of real estate assets may be in the crosshairs of those seeking funds to pay for new programs.  

Taxes can generally be divided into three categories: taxes on what we earn, taxes on what we purchase, and taxes on what we own. While most folks have accepted paying reasonable taxes on our income or goods we purchase, the notion of paying taxes on the value of all a person owns is arguably far less popular and has proven difficult to implement in countries that have attempted to impose such taxes. 

Wealth taxes are typically collected annually on the value of an individual’s net wealth (total assets, minus liabilities) above stated thresholds.

Twelve European countries had wealth taxes in 1990 and today there are only three including Spain, Norway, and Switzerland.** Why did these wealth taxes fail?

There were several reasons including difficulties in administering and collecting them: they created challenges for citizens who owned many assets, but who possessed relatively little cash to pay taxes; they produced incentives for the wealthy to move to other less taxed countries; and, ultimately, they raised relatively small amounts of tax revenues. The cost of hiring an army of bureaucrats to determine the annual net worth of targeted individuals simply proved too costly. 

Assessing the value of certain types of assets like artwork or jewelry can be very difficult and lead to disagreements that can be time consuming and expensive to resolve. 

Taxes on the value of real estate that we own however have stood the test of time. Property taxes are the most common form of wealth taxes largely because real estate values are relatively easy to calculate. Homeowners and tax authorities can easily research values of comparable properties in each area and quickly determine approximate values at any time. Disagreements can be settled through established tax protest procedures. 

Imposing wealth taxes on assets that are difficult to objectively value have contributed to the failure of wealth taxes to take hold in many countries that have experimented with them. 


Owners of real estate assets are justifiably concerned that an expansion of wealth taxes may in time expose even the less affluent to higher annual taxes and create more tax issues to deal with. Let’s hope that today’s “billionaire’s tax” will not become tomorrow’s higher real estate tax for the rest of us. 


For more information on real estate tax deferral strategies and replacement property please contact us.

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Paul Getty

Paul Getty is a licensed real estate broker in the state of California and Texas and has been directly involved in commercial transactions totaling over $3 billion on assets throughout the United States. His experience spans all major asset classes including retail, office, multifamily, and student, and senior housing. Paul’s transaction experience includes buy and sell side representation, sourcing and structuring of debt and equity, workouts, and asset and property management. He has worked closely with nationally prominent real estate brokerage and investment organizations including Marcus Millichap, CB Richard Ellis, JP Morgan, and Morgan Stanley among others on the firm’s numerous transactions. Paul also maintains a broad network of active buyers and sellers of commercial real estate including lenders, institutions, family office managers, and high net worth individuals. Prior to founding First Guardian Group/FGG1031, Paul was a founder and CEO of Venture Navigation, a boutique investment banking firm specializing in structuring equity investments made by institutions and high net worth individuals. He possesses over 35 years of comprehensive worldwide business management experience in environments ranging from early phase start-ups to multi-billion-dollar corporations. His track record includes participation in IPOs and successful M&A activity that has resulted in investor returns of over $700M. Paul holds an MBA in Finance from the University of Michigan, graduating with honors, and a Bachelor’s Degree in Chemistry from Wayne State University. Paul Getty holds Series 22, 62, and 63 securities licenses and is a registered financial representative with LightPath Capital Inc, member FINRA /SIPC. Paul is a noted speaker, author, and actively lectures on investments, sales, and management related topics. He is author of The 12 Magic Slides, Regulation A+: How the JOBS Act Creates Opportunities for Entrepreneurs and Investors, and Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST), available on Amazon and other retail outlets.

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