Your August Newsletter from CALCAP!

CALCAP CONNECTIONS

August 2020

PRINCIPAL'S CORNER

Comparing the Trump and Biden Tax Plans

With the election just over 60 days away, we thought it was important to consider where each candidate stands on taxes. COVID-19 relief efforts have already added roughly $3 trillion to the deficit, with an additional $1-2 trillion more

expected! Congressional concern over the growing deficit will certainly play a role in how these tax plans ultimately unfold.

President Trump has not yet released a tax plan for 2021 but has made statements about extending tax cuts under the 2017 tax reform law commonly known as the Tax Cuts and Jobs Act (TCJA), and about enacting further middle- class tax cuts. A more detailed plan from President Trump is scheduled for a September release. But even without significant details from President Trump’s campaign, it is possible to make broad comparisons.

Biden’s tax plan generally calls for tax increases on wealthy individuals and on businesses. Biden’s tax proposals would represent a significant increase in tax for investors as well. He proposes to roll back the TCJA for high income households and corporations and increase the capital gains tax. He has also proposed eliminating Section 1031 exchanges for real estate investors. The Biden tax plan would raise an additional $3.8 billion in revenue according to budget experts. The top 1% of taxpayers (taxable income over $400k) would face the largest tax increase and incur an estimated 17.8% reduction in after tax income.

From a corporate tax perspective, the largest source of revenue would come from Biden raising the corporate tax rate from 21% to 28%. Biden plans to also to create a new minimum 15% tax rate on corporate profits, as a response to many large corporations not paying any corporate tax and sheltering foreign profits.

Source: Boston Private

Federal revenues continue to fall further behind government spending. The June 2020 deficit ballooned to a record $864 billion compared to a June 2019 deficit of $8 billion, mostly due to spending on COVID-19!

No matter who wins, the party that controls the Senate will likely be the determining factor in what the next President can accomplish ahead of the 2022 mid-term election. These are interesting and historic times.

Edward M. Aloe

President and CEO

626-229-9057

So proud of our CALCAP Real Estate Advisors, Inc. Team! We made the Inc. Magazine's list of the 5000 Fastest-Growing Private Companies in America! CALCAP ranked No. 774 overall and No. 26 in our industry!

Latest Headlines...

Multifamily confidence increased in second quarter, but vacancies also rose

Multifamily continues its climb back to pre-pandemic levels

The Multifamily Production Index rose 10 points to 37, which is still below the break even point of 50, indicating that more builders and developers viewed conditions as weaker than stronger, NAHB said.

On the other hand, the Multifamily Vacancy Index increased three points, to 62, indicating there are more vacancies.

“The MPI and MVI readings this quarter reflect a multifamily housing market that is continuing its climb back to pre-pandemic levels,” the report said. “The recovery is further evidenced by July multifamily start numbers from the Census Bureau, which show a clear acceleration in starts activity from previous months.”

View Article Here

NMHC Rent Payment Tracker: 90% of Apartment Households Paid Rent by Aug. 20

Collections fell 2.1 percentage points from the share of households who paid through Aug. 20, 2019.

The National Multifamily Housing Council’s Rent Payment Tracker found that 90% of apartment households had made a full or partial rent payment by Aug. 20, based on its survey of 11.4 million professionally managed market-rate apartment units across the country.

This marks a 2.1 percentage point, or 237,056-household, decrease from the share of renters who made a rent payment through Aug. 20, 2019. Last month, 91.3% of renters had made a payment by July 20.

View Article Here

Mortgage lending will beat 2019 by $1 trillion, Fannie says

Forecast: Originations probably will total $3.4 trillion, the highest since 2003

Mortgage lending this year likely will total $3.4 trillion, about $1 trillion higher than 2019, as low rates boost refinancings, Fannie Mae said in a forecast.

That would be the highest level of originations since 2003’s $3.8 trillion, according to data from the Mortgage Bankers Association. Fannie Mae’s forecast put refinancings at $2.1 trillion in 2020, compared with $1.1 trillion a year earlier, and lending for home purchases at $1.3 trillion, level with 2019.

“At the current mortgage rate, we estimate that 65% of all outstanding loan balances have at least a half-percentage point incentive to refinance,” Fannie Mae said in a statement posted on its website.

View Article Here

On the lighter side....

About CALCAP Advisors

About CALCAP

California Capital Real Estate Advisors, Inc., and its affiliate entities (CALCAP Asset Management I & II, CALCAP Properties, CALCAP Lending, and CALCAP Senior Healthcare I, collectively known as "CALCAP"), is a California based investment company founded and 2008 and headquartered in Pasadena, California. The Company sponsors alternative real estate investment opportunities focused on demographically driven housing. CALCAP has been able to consistently provide both individual and institutional investors with outstanding returns over the last 10 years. The Company's core strategies look to actively create alpha for investors while managing risk. CALCAP currently has over $300mm in Assets Under Management. To learn more visit www.calcapadvisors.com.

Social Mission

CALCAP has created the CALCAP CARES program to encourage employees to find a way to give back to the neighborhoods where we invest. CALCAP has created "GiveTime4Autism" as its initial program which will allow employees the ability to donate unused vacation and sick days for a very worthy cause.