Under Section 1031 of the United States Internal Revenue Code (26 U.S.C. § 1031), a taxpayer may defer recognition of capital gains and related federal income tax liability on the exchange of certain types of property, a process known as a 1031 exchange. In 1979, this treatment was expanded by the courts to include non-simultaneous sale and purchase of real estate, a process sometimes called a Starker exchange.
Before 2018, a wide array of property was covered by the deferment provisions of Section 1031. The Tax Cuts and Jobs Act of 2017 repealed Section 1031 for all types of property except real property. NAR explores some of the challenges for the Exchanges moving forward and some of the data being used to support advocacy efforts to preserve it as an important real estate tool.
Outline of Discussion
▪ Policy background of 1031 like-kind exchanges
▪ Why Section 1031 is in trouble
▪ The keys to saving LKEs – education and data