Private equity firms like Grant Thornton are acquiring major accounting firms such as CBIZ, and this consolidation often changes client experience and firm culture as ownership flips again down the line.
Trump’s proposed capital gains indexing plan would adjust an asset’s cost basis for inflation before calculating taxable gain, meaning sellers would only pay tax on real appreciation rather than inflation-driven price increases.
The Section 121 home sale exclusion has stayed at $250,000 (single) and $500,000 (married) since 1997, and there is bipartisan support for raising it, possibly to $1 million for married filers.
With private equity reshaping the accounting industry and a new tax proposal generating buzz in Washington, this episode of the Tax Smart REI Podcast has Nate and Justin covering both stories and what they mean for real estate investors and business owners.
Private Equity Is Buying Up Accounting Firms
Grant Thornton’s acquisition of CBIZ pushed the combined firm into the number five spot, putting it in direct competition with the Big Four. Nate and Justin walk through why this matters even if you’re not in accounting: mergers of this size typically bring staff turnover, new processes, and a different client experience once new ownership takes over.
Why Partners Are Selling
The driving force behind these deals is deferred compensation. Partners at large firms build up retirement payouts tied to the value of the business, and selling to private equity lets them cash out that value now rather than waiting years. Nate predicts more of these rollups are coming, with some forecasting every top 25 accounting firm will eventually go public.
The Capital Gains Indexing Proposal
The conversation shifts to a tax idea gaining traction: indexing the cost basis of assets for inflation before calculating capital gains. Under this proposal, if inflation accounts for part of an asset’s price increase, that portion would not be taxed; only the real gain would be.
The Section 121 Home Sale Exclusion Hasn’t Kept Up
Justin points out the home sale exclusion has stayed at $250,000 (single) and $500,000 (married) since 1997, even though inflation over that period is roughly 107 to 108 percent. Proposals on the table include doubling it to $1 million for joint filers.
Could This Happen Through an Executive Order?
With midterms approaching, Nate doesn’t expect Congress to pass new tax legislation soon. He thinks the more likely path is an executive order directing the Treasury to update the regulations, though the two debate whether that would hold up if challenged.
Should You Wait to Sell?
Despite the buzz, their advice is not to let a tax proposal that might not happen delay a sale that otherwise makes sense. Nate puts the odds at around 30 percent for now, with a more realistic shot in 2028 depending on which party controls Congress.
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Disclaimer: This podcast summary was generated from the transcript and may contain some errors or miss key points from the audio recording.
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