by John Salustri
September 17, 2015
“A loss of like-kind touches everyone who touches real estate,” says Joe Consenza, vice chairman of the Inland Real Estate Group in this GlobeSt.com interview.
In preparation for CCIM’s upcoming conference, CCIM Thrive, Consenza talks about the legislative and economic issues that accompany a repeal of Section 1031. Like-kind exchanges benefit local communities and the broader economy, he says. Elimination would impact businesses that depend directly and indirectly on exchange transactions and their improvement, such as appraisers, banks, title companies, roofers, plumbers, and carpenters.
Consenza draws parallels to the 1986 changes in tax laws for individuals writing off deductions on real estate deals. Seeking up-front revenue, Congress passed tax law changes causing a devastating and expensive economic downturn, he describes. He adds that the recovery took nearly seven years. If the series of economic events started by a like-kind exchange transaction were to disappear, local communities would suffer. With the loss of local real estate transaction taxes generated by the exchange, other taxes would rise and cities and school districts would be affected.
The original premise for like-kind exchanges, he points out, still stands. Consenza elaborated: Like-kind exchanges encourage reinvestment and removes unfair taxation on ongoing property investments. “In other words, back then, Congress wanted to make sure that you kept investing because it would grow the economy.”