This resource page and the linked articles are intended to educate and to inform investors and professionals about the benefits of IRC Section 1031 and what they can do to preserve it considering current legislative threats.
Summary
Over the past year, there has been growing speculation regarding the potential tax policies of a Biden White House and how they may affect real estate. President Biden’s address to Congress on April 28, 2021, made it clear that his proposed tax policies would have a major effect on real estate and several related industries. As you may be aware, the Administration has specifically targeted IRC §1031 tax deferred exchanges and has proposed plans to place limitations on it. Read the official White House Fact sheet here.
Section 1031 allows investors to reinvest the proceeds from their sale into new business or investment real estate that would otherwise have been paid to the government as a capital gains tax. Tax deferred exchanges are not new — they have been available in one form or another since 1921, and in its current format since 1986.
What are the proposed limits to 1031 Exchanges?
The Biden Administration proposes limiting 1031 gain deferral to $500k of gain per taxpayer and $1M gain per married couple, per tax year. It is currently unclear how this proposed gain limitation would apply to real estate held in tax partnerships.
Real Estate Investing Outlook – A Discussion on the Economy, Tax Reform, and Proposed Limitations for 1031 Exchanges
In this video we discuss the outlook of our economy and how current tax reform proposals might affect real estate markets, investors, and the real estate industry, with a focus on the effects of the proposed limitation on IRC Section 1031 Tax Deferred Exchanges. Featuring Todd R. Pajonas, Esq., President of Legal 1031 Exchange Services, LLC, Scott Clemons, CFA®, Chief Investment Strategist for Brown Brothers Harriman, and Brian M. Cooper, CO-Chief Executive Officer of Kensington Vanguard National Land Services.
Shared Resources courtesy of the FEA - Federation of Exchange Accommodators
The following are informational resources shared with the permission of the FEA. Please feel free to share with your clients and network and to visit https://1031buildsamerica.org/ for similar content and links to write Congress.
- Sustaining American Businesses During Economic Uncertainty
- Understanding the Impact of Depreciation on Like-Kind Exchanges
- Top 10 Economic Benefits Of Section 1031 Like-Kind Exchanges
- Economic Impact of IRC §1031 Like-Kind Exchanges –Clearing Misconceptions and Setting the Facts Straight
- Repeal Of §1031 Exchanges Job Losses Outweigh Lost Tax Revenue
- FEA-Supporter-Resource-flyer
- FEA Legislative History of Tax Policies Supporting IRC Section 1031
1031 Advocacy and Tax Reform Resources
- Economic Contribution of the Like-Kind Exchange Rules to the US Economy in 2021.
- Economic Contribution of the Like-Kind Exchange Rules to the US Economy in 2021- Slides.
- Economic Impact of IRC §1031 Like-Kind Exchanges–Clearing Misconceptions and Setting the Facts Straight.
- Economic Contribution of IRC Section 1031 Like-Kind Exchanges to the US Economy in 2021.
- Economic Impact of Repealing Like-Kind Exchange Rules.
- Economic Impact of IRC §1031 Like-Kind Exchanges–Clearing Misconceptions and Setting the Facts Straight.
- Economic Impact of Repealing Like-Kind Exchange Rules Prepared on Behalf of the Section 1031 Like-Kind Exchange Coalition March 2015 (Revised November 2015).
- Repeal OF §1031 Exchanges Job Losses Outweigh Lost Tax Revenue.
- Economic Impact of Repealing IRC Section 1031 Synopsis of Ernst & Young Study.
