California-based Peak 1031 Exchange says actions would adversely affect whole economy, not just investors.
LOS ANGELES, Aug. 11, 2022 /PRNewswire/ — As part of President Biden‘s 2023 budget, the administration proposed severe limitations to 1031 exchanges. The proposal would allow taxpayers to defer up to $500,000 of capital gains ($1 million in the case of married individuals filing a joint return) for each sale of investment property. Any gains in excess of $500,000 (or $1 million, as the case may be) would be recognized by the taxpayer in the year the real property is sold.
President Biden‘s proposal would, of course, severely limit the property values that investors can use in an exchange. However, it would also adversely impact the economy as a whole. While this proposal is intended to generate $1.95 billion in revenue for the government through taxing the sale of investment real estate, other businesses that generate income as a result of 1031 exchanges were estimated to have produced approximately $7.8 billion in tax revenue last year, according to a May 2021 study by Ernst & Young.
There are numerous ancillary parties involved throughout the 1031 exchange process, including real estate investors, escrow specialists, qualified intermediaries, lenders, attorneys, and appraisers. In total, the Ernst & Young study projected that businesses related to 1031 exchanges would produce 568,000 jobs, create $27.5 billion of labor income and add $55.3 billion to GDP during the course of last year. As a result, if exchanges are limited as President Biden proposes, the negative impact would extend far beyond the prospective sellers.
“Given the overall economic impact of Section 1031, I think it is doubtful that Congress would enact such an aggressive cap on 1031 exchanges,” says Kevin M. Levine, Partner and Executive Vice President at Peak 1031 Exchange. “However, we also should not take it for granted that Section 1031 will remain intact as it now is. Each one of us must do our part to ensure that we and the economy as a whole can continue to reap the full benefits of 1031 exchanges.”
As a result, we at Peak 1031 Exchange encourage readers to contact their representatives and express their concerns about limiting IRC Section 1031 in the manner described above. This can be done easily by clicking the following: https://1031buildsamerica.org/take-action/
ABOUT PEAK 1031 EXCHANGE:
Peak 1031 Exchange is a leading national provider of tax-deferred 1031 exchange services, specializing in all like-kind transactions including simultaneous, delayed, reverse, improvement and personal Property exchanges. It is part of the Peak Companies (peakcorp.com), a network representing a group of companies providing a comprehensive array of commercial and retail real estate services nationwide including mortgage lending, loan servicing, short sale services, foreclosure services, insurance, real estate brokerage and escrow services. Peak 1031 Exchange does not provide legal or tax advice. Always consult your tax or legal advisor regarding your specific transaction.
The Peak Companies / Peak 1031 Exchange, Inc.
+1 (818) 591-3300 x7013
SOURCE The Peak Companies