New Hampshire Gov. John Lynch Signs 1031 Exchange Tax Fix
New Hampshire SB1316
By: Larry Laidlaw, CES
The New Hampshire Governor signed SB 483 into law on July 8th. The new law amends prior law which would deprive taxpayers Section 1031 tax deferral on a state level if they purchased replacement property in the name of a new entity, notwithstanding that the acquiring entity was a disregarded entity. About 30 investors, assessed by the State Department of Revenue Administration (DRA) for owing a total of $5 million in back taxes on various investments, are off the hook.
Real estate investors often buy and sell property under different entities, since they sometimes must satisfy lenders requirements or they want to limit personal liability.
The new law makes it clear that exchange treatment will not be affected by taking title in the new entity as long as the entity is a single member LLC, revocable trust or other entity which is disregarded for federal income tax purposes. SB 483 is retroactive back to 2004 when the State under their "claw back" efforts started auditing taxpayers. Thanks again to efforts by FEA and an excellent network of state and local relationships can make a huge impact on our industry.
