Are 1031 Exchanges In Jeopardy?

Investors are keeping an eye on proposed legislation from the Obama administration seeking to cap annual 1031 exchange tax deferral at $1 million. This marks the second time in two years that the government is trying to limit the reach of Internal Revenue Code Section 1031.

Last year’s failed efforts to curb 1031 exchanges were included as part of Wisconsin Representative Paul Ryan’s proposal for tax reform. This time around, limitations to 1031 exchanges are included as part of Obama’s budget. The budget has not yet passed, and the real estate industry is engaging in significant education efforts to outline the impact such a move would have on the industry overall.

Obama’s budget attempts to limit 1031 exchanges also incorporate personal property exchanges, which were omitted in last year’s proposal. While nobody knows if or when Congress will pass budget legislation – or whether 1031 exchanges will ultimately be impacted – anyone involved with exchanges should be aware of this potential bump in the road.

To find out how we can help you find and close on your next 1031 exchange property or to learn more about the exchange process and our qualified intermediary services, please visit our website.