Is the 1031 Exchange on the Chopping Block?

Posted on May 12, 2017 at 2:21 pm

The 1031 Exchange has long been an important tax planning tool, but it may be on the chopping block as President Trump and Congress are considering major tax reform. I will be the first to encourage significant tax reform, but the 1031 Exchange should be protected now for the same reasons that it was originally created: to encourage continued long-term investment in real property and other capital assets.

What is the 1031 Exchange?

For almost a century, the 1031 Exchange has served as an important tax strategy for real estate investors and entrepreneurs. The 1031 Exchange allows a taxpayer to defer gains on a capital asset (like real property) which has been acquired and held for investment purposes by exchanging the asset solely for other property of a “like kind” instead of simply selling the asset for cash. Read more about the benefits of the 1031 Exchange here.

What Can You Do to Help?

A number of my clients have approached me with concern over this topic and ask what they can do to protect this important tax planning tool. I strongly encourage you to call your representatives and let them know you want to protect the 1031 Exchange. Tell them you are in favor of tax reform, but are concerned about real estate values and the ongoing economic health of our Central Texas region if this beneficial tax strategy is eliminated. You can find their contact information through this link.

Please contact me at 512-246-3040 if you have questions about the 1031 Exchange or other tax strategies.

Central Texas is a great place to do business. Let’s keep it that way by protecting the 1031 Exchange.

Frank Leffingwell is a tax attorney and president of Frank Leffingwell & Associates, PC.