IPX1031 Insight Blog

Oppose Proposals to Eliminate or Limit 1031 Exchanges

We need YOUR help!

The President has proposed limiting 1031 Exchange tax deferral to a maximum of $500K. The administration says the drastic change is part of the plan to “pay for” the cost of the $1.8 trillion American Families Plan.

This is a direct threat to Section 1031 Exchanges and the proposed limitation will have a severe negative impact on investment real estate and the economy.

You can help. Tell Congress to keep 1031 Exchanges.

Click on the button below to send an electronic letter to Congress. Every letter makes a difference.

 

RESOURCES

IPX1031 Tax Reform site & resources
American Families Plan fact sheet

Comments from the FEA (Federation of Exchange Accommodators) on President Biden’s proposed $500K cap on Section 1031:

  • The FEA opposes the Administration’s proposal to limit IRC Section 1031 like-kind exchange deferral to a maximum of $500K of gain, as a means to pay for the American Families Plan. We view this proposal, which would effectively eliminate commercial real estate exchanges, as well as larger farm and ranch exchanges, as a misguided view of the actual purpose and benefits of like-kind exchanges.
  • Section 1031 encourages real estate transactional activity, and in doing so, is a powerful stimulator of the U.S. economy. Section 1031 is not an unfair or abusive loophole. It is broadly used by taxpayers ranging from middle class individuals exchanging rental houses and small apartment buildings, farmers, and small to mid-sized businesses, to larger taxpayers exchanging large commercial properties in major metropolitan areas.
  • Smaller exchanges create a stable inventory of decent, affordable housing for working families. Section 1031 encourages turnover and investment of fresh capital in these properties, improving neighborhoods and providing decent places to live. Studies have shown that 1031 buyers invest significantly more capital in replacement properties than do non-1031 buyers.
  • Higher valued commercial real estate exchanges are an important source of jobs for contractors, skilled and unskilled blue-collar workers, lenders, real estate brokers, Qualified Intermediaries, title insurers, escrow companies, surveyors, appraisers, architects, landscapers, building material suppliers and more. The income earned generates tax revenue and consumer spending, furthering the economic impact.
  • Recent research by EY has estimated that like-kind exchanges are expected to generate 568,000 jobs this year, including $27.5 billion of labor income and a total of $55.3 billion of value added to the US economy. The economic impact of like-kind exchanges in their present form is a far better “pay-for” than eliminating this powerful stimulus.
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