We talk a lot about how section 1031 is constantly under threat of repeal by politicians. Many people ask the follow-up question – “who exactly are the primary opponents of 1031 exchanges?” That’s a great question with a complicated answer. The fact is that section 1031 has been under attack by both sides of the political aisle. The Republicans restricted section 1031 to just real estate (removing personal property exchanges) back in 2018, while the Democrats have called for a full repeal of the section. That said, it is likely a small, vocal fraction of the Democratic party that’s advocating for this change. Many moderate Democrats represent farmers, who have a great deal to lose if section 1031 is repealed.
The important thing to remember when considering any change to the tax code is that small changes can have massive impacts. In 1986, Congress played with the depreciation schedules on how quickly you could depreciate real estate. This was part of an overall plan to streamline the tax code. The result was that real estate plummeted for about a decade. Values declined, real estate didn’t trade, and it was likely the precipitating incident that caused the savings and loan crisis.
This is just one historical example of the potential adverse effects that may come when altering the tax code.
Qualified Intermediaries – Here to Serve You
The qualified intermediaries at CPEC1031, LLC are here to serve you. 1031 exchanges can be confusing and complex. Having a skilled intermediary on your team is the best way to ensure that your exchange is successful and that you defer 100% of your capital gains tax burden. Get the help you need by contacting CPEC1031, LLC today. We work with taxpayers across the country on forward exchanges, reverse exchanges, build-to-suit exchanges, and more. No matter how simple or complex your 1031 exchange, we have the skills needed to get you across the finish line.
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.
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