Republican Tax Reform Plan Puts 1031 Exchanges On The Chopping Block
April 18, 2017 | by Travis Gonzalez | BizNow
In June 2016, while Americans were focused on the presidential election, a Republican task force unveiled a 35-page blueprint for tax reform. Dubbed “A Better Way,” the reform attempts to overhaul tax policy and to stimulate the economy through lower rates, reduced paperwork, job growth and tax incentives.
Among the proposed changes, an almost century-old real estate investment tool, the 1031 exchange, faces elimination.
Investors use 1031 exchanges as a way to defer the tax from any capital gains earned through the sale of a property, so long as the money is immediately used to purchase another asset. Swaps can be between various real property types, like land or multifamily buildings, or can include things like machinery, equipment or vehicles, and tax remains deferred until the property is sold with no reinvestment.
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