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2 edition of estate tax and after-tax investment returns found in the catalog.

estate tax and after-tax investment returns

James M. Poterba

estate tax and after-tax investment returns

by James M. Poterba

  • 353 Want to read
  • 29 Currently reading

Published by National Bureau of Economic Research in Cambridge, MA .
Written in English

    Subjects:
  • Inheritance and transfer tax -- United States -- Econometric models.,
  • Saving and investment -- United States -- Econometric models.

  • About the Edition

    This paper explores the effect of estate and gift taxes on the after-tax rate of return earned by savers. The estate tax affects only a small fraction of households -- taxable decedents represented only 1.4 percent of all deaths in 1995 -- but the affected households account for a substantial fraction of household net worth. The estate tax can be viewed as a tax on capital income, with the effective rate depending on the statutory tax rate as well as the potential taxpayer"s mortality risk. Because mortality rates rise with age, the effective estate tax burden is therefore greater for older than for younger individuals. The estate tax adds approximately 0.3 percentage points to the average tax burden on capital income for households headed by individuals between the ages of 50 and 59. For households headed by individuals between the ages of 70 and 79, however, the estate tax increases the tax burden on capital income by approximately 3 percentage points. The effects are even larger for older households. The paper also explores the fraction of the net worth held by households that are subject to the estate tax that could be transferred to the next generation with a program a per donee exemption from gift tax. While roughly one quarter of potentially taxable assets could be transferred in this way, actual levels of inter vivos giving are much lower than the levels that would one would expect if households were taking full advantage of this tax avoidance strategy.

    Edition Notes

    StatementJames Poterba.
    SeriesNBER working paper series -- working paper 6337, Working paper series (National Bureau of Economic Research) -- working paper no. 6337.
    ContributionsNational Bureau of Economic Research.
    Classifications
    LC ClassificationsHB1 .W654 no. 6337
    The Physical Object
    Pagination43 p. :
    Number of Pages43
    ID Numbers
    Open LibraryOL22404082M

    Mortgage prepayment advocates focus on how much interest you won’t be charged. On a $,, year mortgage at percent interest, if you pay just an extra $ of principal per month, you shorten the loan’s term significantly. Prepayment cheerleaders argue that you’ll save approximately $56, over the life of the loan.   Plus, real estate investors are known for using mortgages, which are a form of leverage, to increase the return on their investment. The present low-interest-rate environment has resulted in some significant deviations in recent years, with investors accepting cap rates that are substantially below what many long-term investors might consider.

    KeatsConnelly provides income and estate tax preparation services to its full service private client, cross-border and investment clients. For our discerning clients, we offer full service US and Canadian tax planning and preparation that is fully integrated with our other services to ensure that our clients achieve superior overall financial results including after-tax investment returns.   Assuming the decedent didn’t make any sizable gifts before dying, no estate tax is due, and no Form is required, unless the estate .

    Investment. Investing should be easy – just buy low and sell high – but most of us have trouble following that simple advice. There are principles and strategies that may enable you to put together an investment portfolio that reflects your risk tolerance, time horizon, and goals. Product Information. More than any other investment area, real estate will be radically affected by the Tax Reform Act of This dramatic new bill will effect property values, rents, cash flows, and rates of return on most real estate investments.


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Estate tax and after-tax investment returns by James M. Poterba Download PDF EPUB FB2

The Estate Tax and After-Tax Investment Returns James Poterba. NBER Working Paper No. Issued in December NBER Program(s):Public Economics This paper explores the effect of estate and gift taxes on the after-tax rate of return earned by savers.

Get this from a library. The estate tax and after-tax investment returns. [James M Poterba; National Bureau of Economic Research.] -- This paper explores the effect of estate and gift taxes on the after-tax rate of return earned by savers.

The estate tax affects only a small fraction of households -- taxable decedents represented. Downloadable. This paper explores the effect of estate and gift taxes on the after-tax rate of return earned by savers.

The estate tax affects only a small fraction of households -- taxable decedents represented only percent of all deaths in -- but the affected households account for a substantial fraction of household net worth.

The estate tax can be viewed as a tax on capital. After-Tax Return: The return on an investment including all income received and capital gains, calculated by taking expected or paid income taxes into account.

Generally reserved for returns on Author: Julia Kagan. Tax Law Change. General Effect on TAI & DNI. Possible Result. $10, cap on state & local real & personal property taxes not attributed to a trade or business & the greater of income or sales tax paid [1] for each trust/estate.

Increased bonus depreciation applicable percentage to percent through for qualified property placed in service after Septem&. Let's say an investor who pays federal income tax at a marginal 32% rate and receives $1, semi-annual interest on $40, principal amount of a 5% corporate bond owes $ in tax.

If that Author: Neil O'hara. To illustrate, he looked at the before- and after-tax performance of taxable fixed-income funds for the ten years that ended Decem The Author: Susan B. Garland. Office of Tax Policy Research WORKING PAPER SERIES The Estate Tax and After-Tax Investment Returns = = = = by James Poterba MIT and NBER = = = = = = = LEADING IN THOUGHT AND ACTION Product Number WP Decem ROSS SCHOOL OF BUSINESS.

Title: Microsoft Word - COVID Resources. Reliable information about the coronavirus (COVID) is available from the World Health Organization (current situation, international travel).Numerous and frequently-updated resource results are available from this ’s WebJunction has pulled together information and resources to assist library staff as they consider how to handle.

More than any other investment area, real estate will be radically affected by the Tax Reform Act of This dramatic new bill will effect property values, rents, cash flows, and rates of return on most real estate : Martin M. Shenkman.

For example, to grow your after-tax investment amount from $5, to $15, in 10 years requires annual contributions of $, plus 10% compound annual returns. You don’t need to accumulate so much money at later retirement ages in order to have a comfortable retirement, simply because you have less of your life to provide for.

Doug Roger's book, Tax-Aware Investment Management - The Essential Guide, should be the instruction manual of choice for those interested in minimizing tax drag for themselves or their clients.

As an investment advisor / planner, one focused upon tax-aware best practices, I support Doug's work and have designed elements of it into my philosophy Cited by: 8. Improper tax management can cost you more than 25 percent of your long-term return, severely limiting your spending power in retirement.

After-tax returns are all that matter—it’s what you. The income and gains in the Roth IRA compound tax free, and they remain tax free when eventually distributed. Distributions of the principal also are tax free. Distributions from a traditional IRA. The before-tax equity (BTER) reversion formula in the case that no debt (a mortgage loan) has been used to finance the acquisition of the property is the following.

BTER = Resale Price – Sales Cost. The sales cost is typically the commission paid to the real estate agent representing the seller in the transaction.

An investor may be considering purchasing a relatively low risk real estate investment (e.g. absolute NNN credit deal) and wants to compare that investment to a potential muni-bond investment. To attempt to get a fair comparison, the investor would need to model the real estate returns after tax.

The estate tax in the United States is a tax on the transfer of the estate of a deceased person. The tax applies to property that is transferred via a will or according to state laws of transfers that are subject to the tax can include those made through an intestate estate or trust, or the payment of certain life insurance benefits or financial account sums to.

The character of income and loss allocable to investors directly impacts after-tax returns on investments and can vary significantly between types of funds. Essential Tax and Wealth Planning uide Tax implications of fund investing After-Tax Return = Percent Return x ( – Percent Tax) For example, if a particular investment earns you a percent return and is taxed at 20 percent x ( –) or 6 percent.

Suppose you own a dividend stock that’s generating a total return of about 7 percent. Approximately 4 percent of that is from capital gains, and. A once-off tax at the end of an investment period would include capital gains tax on a buy and hold strategy, but also other types of tax such as estate duty.

You should, therefore, try and minimise your annual tax burden as much as possible on interest income, rental income, dividend tax and your capital gains tax due to trading.

Case Study Utilizing aftertax rather than pretax yield to evaluate investments is a universal rule that applies to stocks, bonds, real estate, and mutual funds. In the Securities and Exchange Commission adopted a rule requiring that mutual funds disclose in their prospectuses aftertax returns based on stipulated formulas.Not a bad return on a $33, investment% pre-tax and with a 35% marginal tax rate, % after tax.

Now you see why these real estate guys get all excited about this stuff. Years Two Through Seven. So what happens in year two? Well, the mortgage is paid down a little bit more. You raised rent 2%, and depreciation stays the same.The most common practice in the real estate investment community is to estimate after-tax returns.

Return on Equity. Return on equity is the return on the investor’s capital (referred to as equity) used in acquiring a property investment.