The Democratic Party recently released their 2024 Platform. In it, they call for the repeal of section 1031. Here is an excerpt from page 16 of the Platform document:
“We’ll also eliminate the so-called ‘like-kind exchange’ loophole that allows wealthy real estate investors to avoid paying taxes on real estate profits, as long as they keep investing in real estate – a tax break that Trump protected for himself and other corporate landlords in his 2017 tax scam. No other industry has that kind of sweetheart deal; it ends now.”
In this article, we are going to explain why repealing section 1031 of the Internal Revenue Code is a bad idea for individual taxpayers and the economy as a whole.
1031 Exchanges Benefit a Wide Range of Taxpayers
1031 exchanges are not just for wealthy investors as some in Washington seem to believe. In fact, most of our clients are small mom & pop shops – families who own duplexes, retail shops, farms, etc. These taxpayers often depend on the tax-saving benefits of Section 1031 to grow and expand their businesses.
1031 Exchanges Benefit the Economy
1031 exchanges are good for the overall health of the economy too. Like-kind exchanges create jobs (in construction, real estate, and other adjacent industries), incentivize investment, and keep capital moving around in the US economy.
Section 1031 encourages the development of workforce housing, private infostructure like warehouses and distribution centers, and allows for the re-imagining of underutilized real properties. If Section 1031 did not exist, owners of investment real estate would be much less motivated to continue investing in real estate. It’s much more likely that they would simply decide not to sell in order to avoid a capital gains tax hit. This is called the “lock-in effect” when owners can’t sell without the double hit of recognition of the taxes and repayment of their mortgages…after which they might not have much to keep from the sale.
Take Action to Save Section 1031
Click on this link to learn more about the many benefits of section 1031 and take action to preserve section 1031 by contacting your member of congress:
https://1031buildsamerica.org/
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2024 Copyright Jeffrey R. Peterson All Rights Reserved