Table Of Contents
In this episode, Brandon and Thomas talk about another update on the Build Back Better Act.
This episode is sponsored by Landlord Studio and Tax Smart Investors.
Full Transcript:
This podcast has been transcribed using AI, please excuse spelling, grammatical, and other errors.
Thomas Castelli 0:00
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Brandon Hall 0:05
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Thomas Castelli 0:30
Hey, everyone, thanks for joining us for this episode of The Real Estate CPA Podcast. Today we're back to talk about a another update with the build back better act? Yes, indeed.
Brandon Hall 0:39
So Thursday, last Thursday, the 18th 1118. The house was expected to vote on the build back better act, but was blocked in the afternoon by Kevin McCarthy, who gave a record breaking eight hours and 33 minute speech. I believe that he yielded the podium to stand at like 5:30am in the morning on Friday. So what do you been talking about for eight hours and 33 minutes? I can't even talk for like an hour straight?
Thomas Castelli 1:14
I don't know. Imagine. I don't know if he winged it or you plan that out? Because I mean, to plan out his speech for eight hours and 33 minutes. That's gonna take a lot of planning. So I have to imagine he improvised, but I just can't see what he'd be saying for eight hours. 33 minutes. He must just been spewing, spewing stuff just to stop it. I mean,
Brandon Hall 1:32
yeah, yeah. I mean, I mean, I think the speech is actually public, if you have eight hours and 33 minutes to go in and go watch it. But apparently it was Republican talking points. It was about I think it was like his kind of way to position himself as I don't really understand how it works with some leader in the future of the Republican House. I already saw he was like, hitting on some. Yeah, hitting on some talking points and putting the Democrats down. But apparently, like Democrats are live tweeting it and cheering him and Republicans are cheering and it's just, like, eight hours and 33 minutes, man, I mean, look, regardless of what side you're on, cuz I think Nancy Pelosi did this. Well, back in 2018. So she had the prior record and 2018 for speaking for just over eight hours. And look, I don't I don't care. What side of the fence you're on here. The speaking. Speaking for eight hours is incredible. Like, that's incredible. I mean, think about that. That's going from you go into work. You clock in, and you have to start talking and you're not allowed to stop talking until you clock out at 5pm. I mean, that's like, yeah, it's it's insane. That's a lot, man. That that's a lot. Yeah. Anyway,
Thomas Castelli 2:45
oh, you're gonna hear next though, you're going to hear next that there's gonna be someone who spoke for eight hours and 54 minutes or something like that, because now someone's gonna have to beat that record. And it's just gonna become like,
Brandon Hall 2:54
Yeah, but wild a lot longer speech in modern history, apparently. So what that speech did is it delayed the house build back better plan vote from Thursday evening to Friday morning. So Friday, November 19, The House voted on the build back better plan. They did pass the build back better plan. And so now it goes to the Senate for a review and vote. Now. There's a couple of issues with with Well, the main issue, I should say. Is that the the CBO. And what is the CBO? Tom,
Thomas Castelli 3:32
it's the Congressional Budget Office,
Brandon Hall 3:35
Congressional Budget Office estimates that the build back better plan is actually going to add $160 billion to the deficit. So the original proposal by the house was that there was not going to be any sort of deficit add. And that's what mentioned in cinema said, Cool, well, we'll sign on if that's going to be the case. But we want the CBO to mark this up to double check and confirm that there's not we're not going to add to the deficit. So they were on board as long as it didn't add to the deficit. But the CBO just came out and said it does add $160 billion to the deficit. And the main issue was the estimate on how much collections how much revenue is going to be generated from the increase in IRS enforcement. So the house is overestimating maybe and the CBO is maybe under estimating. Nobody's really sure what the revenue collections actually gonna look like. These are just estimates. But because the CBO is coming out and saying that it's going to add 100 and 60 billion to the deficit, it's unlikely that mansion and cinema are going to sign on without making any any changes or amendments. So over the next couple of weeks, we would expect to see changes and amendments to the bill back better plan. We would expect to see it passed back to the house for another reconsideration and vote. Once the House votes on it again, they'll pass it back up to the Senate for Another vote, the Senate has 50 Democrats, that's all they need for a budget reconciliation vote. The reason that they only need 50 is because there's no filibuster for budget reconciliation. So the filibuster requires 60 senators to vote to stop the filibuster, a filibusters and eight and a half hour speech type of thing, right. So a filibuster is a defense to block voting on legislation. And as long as you can keep talking, then you take up floor time and nobody can vote. But you need 60 senators to vote to stop the filibuster. Well, with the budget reconciliation process, there is no filibuster. So you only need a majority 50 Democrats or 50 senators, and then the Vice President will come in and do a tiebreaker. So that's what they're hoping for. So once they make changes to the bill back at our plan or act, they'll kick it back to the house, the house will revote on it, kick it back up to the Senate, Senate will vote on it, they'll get all 50 senators to sign and then Vice President Kamala Harris will come in with the tie breaking vote and send it to President Biden's desk to then sign it into law, I would expect all this to happen within the next two to four weeks. So I think within the next two to four weeks, we're gonna see either one of two things, we're gonna see mansion and cinema, kill the deal. Just totally kill it. And they might do that by saying, you know, this is too much it's going to add to inflation, it's going to hurt our economy. It's too much social spending. The CBO is estimating something that's wildly different than what the house was estimating. So we don't want to do it. We want to wait, we want to be bipartisan, you know, whatever the reasons going to be, they're going to, they could just totally kill it and kick it down the road to next year to vote on. After everybody goes through primaries again, and house congressmen and women and everybody gets changed up, or, or they pass it all within the next two to four weeks. So my expectation would be that probably by December 15. At this point, we'll know for sure if this thing's going into law this year or not, but no real changes. I mean, do you want to run through a summary of what's in it? Just a two minute summary? I mean, we covered it on our last podcast pretty well. So if you want the detail version, go to last week's podcast, but this week's podcasts gonna be relatively short, because not a whole lot of changes other than the eight and a half hour speech and then kicking it up to the Senate for a vote.
Thomas Castelli 7:26
Yeah, I mean, I think I think we could do that, I may think there is a few, a few things that are going to be important to know if you're an investor out there. And I think you know, the big one. One of the big ones is the $12,500 vehicle credit, it's not really for investors pretty much for anybody, but it's going to be a big one. Nonetheless, it's a $12,500 vehicle credit, if you buy a new vehicle, a new electric vehicle that meets certain requirements, we go through those requirements in greater detail in that in that prior podcast. We also have 30% credit for commercial vehicles, commercial electric vehicles that meet certain requirements as well. So I mean, those are there. Obviously, they want to push clean energy, there's also then the residential energy, credit 30% Credit on residential. Basically, the credits for energy efficient property, which can include solar electric water, fuel cell or wind energy are also geothermal heat pumps. And that's a 30% credit for all eligible expenditures through the end of 2031. So essentially, the next 10 years, and then the credit phases out to 26% 2032. And then 22% 2033.
Brandon Hall 8:37
Yep. And then we have the salt tax deduction being increased from 10,000 to 72,500. And I keep seeing articles about the an $80,000 cap, like the Wall Street Journal, New York Times, all these Forbes even was putting out these articles about this $80,000 cap. And I was like, looking in the actual bill text, because I mean, I was looking at the summary originally, and it said 72,500 So then I went to the bill text, and I double check that yesterday evening, yesterday being Friday, it still says 72,500 So I don't know where they're getting the numbers.
Thomas Castelli 9:11
They could just be rounding it up. You know, sensationalizing it a little bit.
Brandon Hall 9:16
True. True. Yeah. Get my 80,000 looks better than 72 Five but it's also alive so
Thomas Castelli 9:21
yeah, probably grabs more headlines to say it's an $80,000 a, you know, it's a you know, they're raising the cap $1,000 More people are gonna be like, Oh my God, you know, then people say 72 Five, but I don't know.
Brandon Hall 9:33
Yeah, it's just not hard to find this information. That's what's like little weird about it. Anybody can go find this information. By the way, like if you want to see a summary by summary breakdown. Well, one you can go to our content website tax smart investors.com. I put out an article yesterday Friday 1119 on an updated what's in the build back better plan. It is gated, so you do have to subscribe. And I would love for you to subscribe, but I just took the summary of the house rules, and just kind of put it all on there. But if you want to see the the entire bill text in the entire summary, just Google house rules. And the first like one or two things that are going to pop up is the House Rules Committee, you click on it, and right there on the first page, they're gonna have like the bill back better plan. He click into that. And then you can like select, yeah, I want to get a PDF of the bill text all 2300 pages or however long it is. And then I want to get the 180 page summary. And so you can you can go find this information. That's what's like surprising about it. It's not hard. It's not like it's some of this stuff can be hard to find, but this is not hard to find. So where are they getting $80,000 from? But anyway, $80,000 modification of wash sale rules on cryptocurrency and we've got a surtax on high income individual's you got to be earning a lot of money. So $10,000,000.20 $5 million. So unfortunately, Tom, you're we're joking that your income is going to be extra taxed. Boehner, share some of that with me, me.
Thomas Castelli 11:08
States dude, I'm about to go live in another country is something I don't know.
Brandon Hall 11:11
Oh, my gosh. Yeah. And then we've got the elimination of the backdoor Roth IRA strategy. So all that's still in there. All of that was advanced to the Senate. In and that backdoor Roth IRA strategy? Will the elimination of it will kick in starting January 1 2022.
Thomas Castelli 11:30
Yeah, that's a bummer. It's a bummer that backdoor Roth was it was a was an awesome strategy, but hate to see it go. I guess they just don't want. They want people paying their taxes in the future, I guess. Yeah. Yeah.
Brandon Hall 11:42
And then, of course, we've got the big elephant room, which is the $45 billion being allocated to the IRS. You know, I was looking at their budgets, the IRS budgets, cuz I was trying to figure out what is 45 billion, relatively speaking for the IRS and their expenditures, I believe in 2020 were like 14 billion. Wow. So that's yeah. And then I was reading a report saying that the this increase was supposed to get us to 2010 audit rates. 2010 audit rates are like four times as high as what they are today. So when we're, I think it's four times that I could be lying. So it was pretty significant. I think it was like, Yeah, I actually don't know I could be lying. It was three or four times higher. So somewhere, somewhere in there, which I know is a pretty significant variance. Regardless, significant increase in audits coming down the pipeline, so prepare yourselves Prepare yourselves. What's that? What's that meme? Remember that meme from a long time ago is like 2010 2011 high tide you know what I'm talking about?
Thomas Castelli 12:47
Yeah, Hi, kids. How you hide your wealth because the IRS has no idea how to wealth. Yeah, because it's also the other one for brace yourself. Winter's coming and brace yourself the IRS
Brandon Hall 12:59
Oh man, I'm so sad that they killed off Ned Stark that was the that was like the sad if you haven't seen Game of Thrones havea I've dabbled with it? I haven't really well I just gave you the biggest spoiler of mankind. I can't believe I just did that and everybody else is listening that hasn't listened to Game of Thrones. You know what? Okay, if you haven't listened to Game of Thrones, you need to skip probably the next 30 seconds all right 123 Look the killed off Ned Stark I was shocked to the killer I've never watched a show where they killed the most beloved main character in the first season unexpectedly you know even when he's like going up to the execution stand you still think he's gonna get out of it somehow and then he doesn't and you're like oh my god and then his daughter watches it such a sad sad scene but Winter's coming guys winter in you know winters being the IRS is coming yeah for your gold so So prepare prepare now
Thomas Castelli 13:55
coming for your Bitcoin to
Brandon Hall 13:57
go in for your Bitcoin. Oh, no. Oh, you're not gonna be to hide stuff. Yeah, like it's seriously it's you gotta watch out you gotta watch out.
Thomas Castelli 14:08
But yeah, they also have they're also making permanent the excess business loss limitation. So anybody out there who's you know, trying to duck massive losses against ordinary income, especially if your W two income you're going to be capped at 500,000 Now that is adjusted for inflation, but there's still going to be a cap in there and that's unfortunate to say they made it permanent but it was in place I think until 2026 Anyway, so not really any effect on the immediate future but they just they just kind of made that indefinite so
Brandon Hall 14:37
yeah, I mean look like that. That's pretty much today's episode we we're going to be running webinars on the build back better plan as soon as it's finalized. And if you want early access to it, you need to be a subscriber at Tech smart investors calm. So if you want to get in on the action early as soon as we have the full Picture the full scope. Let's go to tech smart investors.com You need to subscribe to the plus or the Pro Plan because those are the people that are in our insider group. And they are the ones that are going to get early access to everything as well as our clients at the real estate CPA. Now before we leave you, I did actually want to bring up that we were recently named a top 10 multifamily podcast Did you know that
Thomas Castelli 15:25
really, it's yeah, it's is the first time learning about it. That's exciting.
Brandon Hall 15:30
Yeah, man. Yeah, we were recently named one of the top 10 real estate investing or one of the top 10 multifamily podcast because we keep it interesting but whenever they do this they always say me they don't give you credit Tom like your your I don't think that people understand that this show would not exist if it wasn't for Thomas Castelli. Seriously, thanks. When I started this show, I think I started it back in 2015 or 2016. I understood that podcasting was powerful, but I had so much going on that I would put out episodes like sporadically so if you ever go back and listen to our earlier episodes, you can see the release dates and they're like all over the place. And then Tom came on board he was like look, podcasting is going to be our next level thing. It's going to be the thing that sets us apart we have to do it we have to do it consistently one episode a week you got to commit to it and and he's grown our podcasts from essentially like I think we're I had it was 4000 subscribers or 4000 downloads a month to last month we had almost eight do we cross at are we I think we all do almost 80,000 downloads last month I mean honestly it's incredible man I was like shocked looking at the stats. So Tom Castelli folks, if you're going to name us a top podcast in the future, you got to give Thomas Castelli credit this guy is is the reason for our existence right now. And the reason that we keep putting out good content so he keeps he keeps me on what's the what's the kosher term? It keeps my butt to the fire. Make sure that
Thomas Castelli 16:59
I'm getting fire. Yeah, yeah,
Brandon Hall 17:02
yeah, we're it was a Invictus capital by Anthony vecina. And we were on there with you on a Weiss and his podcast and Joe Fairless. And all those guys. Oh, Jake and Gino, too. They were named So pretty cool.
Thomas Castelli 17:16
Yeah. Yeah. That's awesome. That's awesome. It's exciting to see this thing grow. We crossed a million listen threshold, and we're keeping going. So excited to keep putting out podcasts. We only missed three episodes, two episodes. And that was both Christmas break two years in a row. And there's going to be another break for Christmas. So that'll be the traditional missed episode every year. But it's okay. We'll keep going.
Brandon Hall 17:39
Yeah, I can't believe that we missed Christmas. That's what a shame. Yeah, I mean, we hit 1 million earlier this year. We're already we're already $300,000 over. So we're at like 1.3 million total Listen, which is really cool. And last month, we had 78,000. So we had 70. So we have across the 80,000 listeners yet, but, but we hit 70,000 Last month, which is awesome. Awesome. So yeah, hats off the tongue, guys hats off the tongue. But that's it. That's all I got for you today. Short, sweet, simple. We'll keep you posted on legislation. Make sure that you sign up for our newsletter and join our Facebook group tech smart real estate investors Facebook group that's facebook.com/groups/tech smart investors. We're keeping everybody updated on legislation in that group as well.
Thomas Castelli 18:24
Yep. So we'll we'll catch you over there but we're tuning out for now.
Brandon Hall 18:29
Thanks for listening to today's show. If you enjoyed the show, please find us on iTunes and leave us a review. You can also email us at contact at the real estate CPA comm with any feedback or topic suggestions, we are always taking on new clients and with the new tax laws in play. You really don't want to navigate this alone. Let us help you save money on taxes with your accounting and CFO needs. To become a client navigate to our client page at the real estate CPA calm and fill out a webform with as much detail about your situation as possible. Thanks so much for listening. Have a great rest of your week.
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