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tax reform; capitol building

Take Action: Protect The 1031 Exchange

The REALTORS® Land Institute and National Association of REALTORS® need your help to ensure the 1031 exchange remains protected in the proposed Tax Plan. Both the House and the Senate have released their tax reform plans retaining 1031 like-kind exchanges for land and real estate. However, we cannot be complacent – there is still a risk to 1031s as the tax reform proposals make their way through the legislative process.

The REALTORS® Land Institute and NAR need your help to protect 1031 like-kind exchanges for land and real estate. We encourage all landowners and land professionals to take action and help us ensure this valuable tax code makes it safely through the as the new Tax Plan moves forward.

Two Ways To Action:

1. Email this letter to your Members of Congress here.

OR

2. Call your Members of Congress and inform them of the importance of protecting the 1031 Exchange. You may use the information in this letter as a reference.

For more talking points or information on 1031s and their importance, visit our Advocacy page or our member resources center.

Template Letter to Send to Your Member of Congress

Dear Member of Congress,

As Congress considers ways to create jobs, grow the economy, and raise wages through comprehensive tax reform, I want to thank you for retaining current law regarding like-kind exchanges for land and real estate under Section 1031 of the Internal Revenue Code.

I would also urge you to retain this important land investment tool as the bill moves through the legislative process. Like-kind exchanges are integral to the operation and vitality of thousands of American businesses, especially in the land real estate sector. Like-kind exchanges allow taxpayers to exchange investment and business property for similar types of property, to diversify or consolidate holdings, and to transition to meet changing business needs.

A recent economic study found that like-kind exchanges encourage real estate and other capital investments.[1] This study also concluded that taxpayers engaged in a like-kind exchange make significantly greater investments in replacement property than non-exchanging buyers.

The elimination or restriction of like-kind exchanges would increase the cost of capital, slow the rate of investment, and decrease real estate transactions. It will have a negative effect on land transactions since land is not allowed to be expensed. Restricting this tool will lower land values across the country, which will negatively impact rural counties’ tax base and economic potential.

Like-kind exchanges promote tax reform goals such as economic growth, job creation, and increased competitiveness. Restricting them would hinder economic activity and investment, particularly in land.  It is an essential tool used by family farmers and ranchers and should be retained.

Thank you for your consideration of this important matter.

Sincerely,

[1] David Ling and Milena Petrova, The Economic Impact of Repealing or limiting Section 1031 Like-Kind Exchanges in Real Estate (March 2015, revised June 2015), at 5, available at http://www.1031taxreform.com/wp-content/uploads/Ling-Petrova-Economic-Impact-of-Repealing-or-Limiting-Section-1031-in-Real-Estate.pdf.

The Trump Tax Plan & 1031 Exchange Tax Reform

With a new president in the White House who campaigned on tax cuts, and Republican majorities in the House and Senate who have long been waiting, 2017 may be the year tax reform finally moves forward. But major storm clouds loom on the horizon for 1031 like-kind exchanges. 1031 like-kind exchanges, a very useful tax provision for the real estate sector, could be reformed or eliminated during the next phase of tax reform activity in Congress.  Take Action.