I heard some rumblings out of NAR (National Association of Realtors) that the industry was looking to do away with 1031 exchanges. I didn't know if that was in Michigan or nationally but has anyone else heard of that or have any thoughts?
I feel like that would be terrible for us investors....
I've never heard that and don't think that's likely to happen. (Even if it were to ever happen, you couldn't just "do away" with them in Michigan since it's based on a provision in the federal tax code.)
From everything I've heard, NAR actually supports 1031 exchanges (more business for them). In fact, here's a recent article where NAR is quoted as saying "like-kind exchange transactions are fundamental to the real estate investment sector, and repealing the tax provision would have negative effects across real estate markets and the industry".
I'd say don't worry about them going away any time soon.
Congress is always looking for more money to spend. There have been some discussions about closing the 1031 loophole. Don't think it will happen anytime soon.
Very interesting. I will have to find the article I saw it in. It was in one the handful of REALTOR magazines I receive each month.
Hopefully doesn't go away but like you said Al, government LOVES getting their hands on those "pesky rich people loopholes." Haha
The provisions of Internal Revenue Code 1031 has changed over the years and may change in the future. But it was built on the fundamental principle that exchanging two items of like kind between two (or more) parties should not be taxed. Some items, like investment securities, were exempted from the beginning, but for the most part it would be very difficult for Congress to exclude all forms of tax free like kind exchanges without having structural consequences to the tax code.
It may be possible that the NAR article was saying that real estate professionals may not want to bother with these deals. If such were the case I can't see why attorneys might not want to take over the burden, assuming that real estate was still eligible for 1031.
The NAR certainly wouldn't want to see 1031's disappear. Maybe make it easier, but not get rid of it.
I realize this thread is a year old, but I heard something last week that may be of interest. A 1031 Facilitator in Sacramento told me the 1031 will likely go away if President Trump gets his tax package through congress. He wants a lower tax rate (including capital gain) in return for fewer write offs; he's trying to simplify the tax code. We'll know more later this year.
I'm getting the same warnings from my 1031 company.....
The current administration wants to eliminate the 1031 exchange. Kevin Hardy who is committee chairman of the House Ways and Means Committee is pushing hard to kill the 1031.
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