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2010-12-08 17:23:50

Tax Cuts – 2011 – Real Estate - Watch for a Pretty Good Year

Are the horrid economy and the total collapse of the Real Estate Industry finally going to appear in our rearview mirrors in 2011? I believe the answer is yes, assuming the Bush Tax Cuts are extended for all.

There are several reasons why I believe we will see a significant improvement in our industry this year. First, once we see the Bush tax cuts extended for all, we will see the small businessman start to free up capital again. We have all been watching our pennies, because we were watching a tsunami bear down on us as a huge tax increase.

Most of the people making $250,000 or more, except for the few making billions, are small businesses operating as S Corporations. If the Bush tax cuts weren’t extended, these S Corporations would be become the highest-taxed corporations in the world, right here in the United States.

So let me ask a simple question. If the United States has the highest taxes in the world on corporations, would that attract companies from other countries to open in the United States? Or would it drive many existing United States corporations out of the country? I don’t think it takes an Einstein to answer this question.

So with the extended tax cuts, the small businessman will feel more comfortable expanding. I need to hire another data entry person myself, and now I feel much more comfortable doing so. I wouldn’t have hired that person had I been hit with additional taxes. I would have worked the current staff to death. I would not have had a choice.

So with business’s expanding and spending, the economy will improve, and that will help our industry. There is a pent up demand sitting on the sidelines in our industry. Families who were dreaming of moving up into a little larger home four years ago may now feel more comfortable to do so, as just one example.

Another reason I think our industry will have a good year is that there are billions and billions of dollars just sitting and doing nothing, because the people and businesses with the money have been scared to spend it. Whether you agree or not, people with money don’t like the socialist agenda, and this administration has scared the bejesus out of them. With the recent election and with the Bush tax cuts extended, they will feel freer to start spending money again.

A lot of the billions sitting out there on the sidelines will be spent by Real Estate Investors, because they know this is one of the best times in history to buy Real Estate.

A very wise old man once told me:

“YOU MAKE YOUR PROFIT ON REAL ESTATE WHEN YOU BUY IT, NOT WHEN YOU SELL IT”

This means if you buy correctly, then you will do well when you sell. The smart investors know this, so I believe a large part of the billions sitting on the sidelines will flow into Real Estate.

Just in our company I have seen sales improve by almost 40% since the election, and in the last couple of days, since the announcement of the extension of the Bush Tax cuts, I have seen pending sales explode. Last week was the second best week we have ever had in pending sales, and the first two days this week have already almost achieved last week’s results.

As a result of what is playing out in Washington, I believe we will see a pretty good year next year in our industry. Don’t be surprised to see sales exceed 5 million next year.

 

 

James A. Crumbaugh III is CEO of Allison James Estates and Homes, a National Internet Based Real Estate Brokerage. You may reach Mr. Crumbaugh at jcrumbaugh@allisonjames.net

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