We have blogged about 1031 Like-Kind Exchange in the past, but it is defiantly worth repeating.  Overall, about 1 out of every 4 Real Estate deals we are involved with are associated with a 1031 Like-Kind Exchange.   We recently gave a presentation at Preston County Club (for the Triangle Real Estate Investors Association) and many of the questions from the audience were related to 1031 exchanges.

As you probably know, there is a major effort underway in Congress to reform the tax code and reduce the tax burden. These reforms are complicated and while not specifically targeted in the current tax reform plans, the continuation of the Section 1031 like-kind exchange has been discussed as something that could be on the table.

What, exactly, is the 1031 Like-Kind Exchange? Section 1031 of the U.S. Tax Code lets those who reinvest proceeds from the sale of a non-homestead properties in similar (‘like-kind’) properties defer paying tax on the profit. It’s often referred to as the 1031 Like-Kind Exchange.

So why would any member of Congress want to reduce or even eliminate the 1031 Like-Kind Exchange?  The government could collect an estimated $40 billion in taxes over a ten-year period by repealing Section 1031, but the flip-side is that it would cost our economy in lost growth and opportunity.

The Commercial Real Estate community continues to monitor and lobby to protect the 1031 exchanges.

As with everything in the tax code, there are lots of requirements and “i’s” to dot and “t’s” to cross in order to quality for the 1031 Like-Kind Exchange.  So if you have any questions related to 1031 exchanges, let us know how we can help.