What Happens if We Lose 1031s?

[John Rubino]

Hey guys...I just read that the Biden Administration is seriously considering axing 1031s to pay for the next huge government sponsored spending plan (Family Plan). Besides the potential of eliminating the "step-up" basis killing the 1031 could be extremely detrimental to CRE and seeing a rebound to the economy.

And we all have heard what the administration is also considering for Capital Gains taxes...YIKES!

One option that looks to be sticking around is the Opportunity Zone program.  This (and maybe DSTs) could be the last way to shelter some deferred gains to keep Uncle Sam off your back for a while.  It also has several other benefits (bonus depreciation, reduction of tax payment on the deferred gain you invest in the OZ by 10% as per the 2021 regulations, and tax free returns after 10 years).  Lot's of promise here and could be a good way to preserve some of that long term wealth.

Good luck out ther.

[Sean Ross]

@John Rubino as @Dena Puliatti mentioned, this does appear to be capped for gains that are $500,001+ for any given asset sale; now, this could capture a lot of deals, particularly those that are the result of chain 1031s.  But it leaves plenty of room for some exchanges. 

Of course, new administrations swipe at 1031 exchanges with some regularity.  The Trump Administration tried to axe them entirely in 2017; the industry managed to push back and preserve real property exchanges. 

There are a lot of good, smart, hardworking folks trying to tell legislators that 1031s mean a great deal to the economy.  

 If you want to send a message to your legislator, you can do so easily through the Federation of Exchange Accommodators