Feelings about the potential abandonment of the 1031 exchange

MBA, CFP®, EA · Columbus, OH · Member since 2018 · 175 posts · 207 votes

So the US Tax Code could be changed for the worse/better if they decide to due away with the 1031 exchange provision. I have used the provision many times but wanted to get everyones thoughts on the issue. The pro's and con's (which i see both). What does the bigger pockets community think?

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Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
8y
I have benefitted from 1031x and would like to see it continue; but now that I am retired, my wife and I are ‘real estate professionals’ so that is pretty good too from a tax standpoint.
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John Pelaez
Kalamazoo, MI · Member since 2016 · 45 posts · 13 votes
8y
if you have used the 1031 repeatedly and have obtained a large amount of properties from it, are you liable for the taxes you didn't pay if the 1031 exchange law gets revoked?
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Brian M Sweeney
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MBA, CFP®, EA · Columbus, OH · Member since 2018 · 175 posts · 207 votes
8y
@John Pelaez so this wouldn't be the case. You would be grandfathered into the old provisions. That being said, they could change the way the profit or basis is taxed on that property when you go to sell. They may invoke ordinary income taxes, long term capital gains, etc. Obviously this is still all very up in the air.
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
8y
@Brian M SweeneyAt this point in time there are no potential changes to sec 1031. The new tax code adopted and put in place for 1/1 specifically preserved 1031 for real estate transactions. It did eliminate 1031 for personal property (non-real estate). So rest easy. It's here for a while longer.
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Shiva Bhaskar
Investor · Los Angeles, CA · Member since 2017 · 523 posts · 476 votes
8y
Seems like Congress is pretty friendly to commercial real estate, and whatever changes there may be politically (not something I get into here on BP), I think real estate investment and development is something that benefits (or can benefit) every single zip code in this country, and at one level of another, politicians do see this. If they don't, it's our job to advocate for the investor community.
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Brian M Sweeney
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MBA, CFP®, EA · Columbus, OH · Member since 2018 · 175 posts · 207 votes
8y
@Dave Foster this is also true. But not as fun as a conversation!
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