5. Tax Policy Reversal Risk Perhaps the biggest threat of all: political whiplash. If deficits balloon faster than anticipated – and they usually do – future Congresses may feel pressure to reverse course on these tax breaks. That could mean repealing today’s tax perks or even adding additional tax burden to close the deficit gap. Remember, what’s given through legislation can just as easily be taken away.
REMEMBER, WHAT’S GIVEN THROUGH LEGISLATION CAN JUST AS EASILY BE TAKEN AWAY.
THE BOTTOM LINE There’s no doubt the BBB offers compelling tax incentives for investors right now. And, we should take advantage of them! But we can’t afford to overlook the longer-term implications. Massive deficit spending has consequences, and for our industry, those consequences could include higher borrowing costs, falling asset values, reduced public support, and less favorable tax treatment down the road. As always, smart investing is about looking past the headlines. Take the benefits while they’re here, but plan for the structural shifts that could follow. If history has taught us anything, it’s that easy money today often comes with a price tag tomorrow.
J SCOTT Author, Investor, and Co-Founder Bar Down Investments Connect with J
J Scott is an investor, entrepreneur, and author of five books, including Recession-Proof Real Estate Investing. He is the Co-Founder of Bar Down Investments and Apartment Addicts Multifamily Coaching. J also appears weekly on the podcast, Drunk Real Estate, discussing current events in investing, economics, and finance. Prior to his real estate career, he held management positions at several Fortune 500 companies, including Microsoft and eBay.
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