Meetings with Congress
May 4, 2023
Senior managers of IPX1031, together with members of our trade association, the Federation of Exchange Accommodators (FEA) conducted over 70 meetings with Congressional members and their staff in late April. Although our mission to educate members of Congress and their staff on the significant benefits of 1031 Exchanges will never end; it was apparent in the meetings that all our past efforts and advocacy have been effective.
In addition to participating in those meetings, IPX1031 President, John Wunderlich and IPX1031 General Counsel and current FEA President, Jim Miller met with two senior staff members of the Real Estate Roundtable. The meeting was important to maintain a close connection with a very influential member of the 1031 Real Estate Coalition, a sponsor of the economic studies and an important ally in the preservation of Section 1031.
We will continue to fight for Section 1031, but we need your assistance. Elected officials listen more closely to their constituents! Below is something you can do to help with the Section 1031 advocacy efforts:
Talk with your contacts about preserving Section 1031. Below are the comments the FEA shared with members of Congress about Section 1031 and the cap proposed cap by President Biden (see our March 2023 update). Please feel free to use them in your conversations with colleagues, friends, and representatives.
Section 1031 is an important tool used by business owners, farmers and ranchers, middle-class taxpayers, and others to transition into locations that more efficiently meet their needs, instead of being tax-locked into obsolete assets.
The proposed cap on Like-Kind Exchanges at $500,000 is misguided because larger investors are critical to repurposing and renovating commercial real estate in our post-pandemic economy. The COVID-19 pandemic imposed unexpected and unprecedented trauma on commercial property – particularly retail, hotel, and office space. A significant percentage of these properties need to be repurposed.
These are the types of large-scale projects that revitalize entire neighborhoods, generate significant job growth, and result in widespread community improvement. Section 1031 is an effective tool to encourage this activity while avoiding market disruptions. Allowing businesses to continue to utilize Section 1031 prevents many assets from becoming shuttered blight.
Additionally, recent economic impact studies concluded that Like-Kind Exchanges are a powerful stimulant of transactional activity that, in addition to the benefits described above, generates significant local and Federal tax revenue and contributes to the health of the U.S. economy. The studies found that exchanging buyers make real estate investments that are substantially greater than non-exchanging buyers, resulting in improved communities in which to live, work and play. These studies quantified that limiting or repealing Section 1031 would cause significant economic contraction and job loss.
Most importantly, under Section 1031, taxes are merely deferred, not eliminated!
Thank you for your help in IPX1031’s advocacy efforts. We will keep you updated with additional information as it becomes available.