Biden Administration Proposes to Limit IRC Section 1031


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Chicago Deferred Exchange Company, LLC

The Biden Administration released the broad outlines of its American Families Plan. The plan proposes to limit the application of IRC Section 1031 like-kind exchanges and states: "The President would also end the special real estate tax break—that allows real estate investors to defer taxation when they exchange property—for gains greater than $500,000." Section 1031 is a great economic stimulator that encourages capital formation, supports jobs and allows for re-purposing and re-imagining the uses of commercial real estate in the wake of COVID-19. A recent microeconomic study on IRC Section 1031 tax-deferred exchanges concludes that without Section 1031, commercial real estate transaction activity would experience a lock-in effect leading to property value declines. Investors would hold on to sub-optimal assets for longer periods of time, reliance on debt would increase and rents would likely rise. A recent macroeconomic study on IRC Section 1031 tax-deferred exchanges concludes that exchanges promote job growth and labor income, contribute value-add to GDP, and spur activity that provides federal, state and local tax revenue. Please show your support for this key economic stimulator and oppose a limitation on Section 1031 by visiting: https://www.1031taxreform.com/take-action/. Thank you. Chicago Deferred Exchange Company, LLC ‌