Obama Proposes Additional Limits On 1031 Exchanges

In his FY2017 budget, President Obama has once again set his sights on section 1031 of the IRS code. He has proposed a series of changes to the existing code designed to place new limitations and restrictions on 1031 exchanges.

These proposed changes include:

• Limiting gains to $1,000,000 per taxpayer per year.
• Excluding artwork and other collectibles from eligibility altogether.
• Granting the IRS the rule-making authority to implement Obama’s proposal, including aggregating the gains on multiple properties exchanged by related parties. This means that a series of exchanges that each individually stay below the proposed $1,000,000 cap would still be disallowed if together they exceed the cap.

If approved, Obama’s proposal will go into effect for any exchange completed after December 31, 2016. If successful, this proposal could severely limit the use of 1031 exchanges for small businesses and commercial investors.

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.