Here We Go Again… President Biden’s 2025 Budget
The Biden Administration released their 2025 Budget yesterday morning. Similar to the 2022, 2023, and 2024 budgets, the document includes language re: “repeal deferral of gain from like-kind Exchanges.”
The Treasury Department Green Book, which was released yesterday afternoon, fleshes out the details of the policy proposals in the Budget. The Green Book includes language regarding a cap on the amount of gain that can be deferred using a like-kind Exchange to $500,000 for each taxpayer (or $1,000,000 for a married couple filing jointly) each year.
As we have reported previously, we expected this language would be included in the Budget and we will continue our advocacy efforts to retain 1031.
More information about the proposal and its effects:
- Section 1031 is an important tool used by business owners, farmers and ranchers, middle-class taxpayers and others to transition into locations that more efficiently meet their needs, instead of being tax-locked into obsolete assets.
- The proposed cap on like-kind Exchanges at $500,000 is misguided because larger investors are critical to re-purposing and renovating commercial real estate in our post-pandemic economy. The COVID-19 pandemic imposed unexpected and unprecedented trauma on commercial property – particularly retail, hotel and office space. A significant percentage of these properties need to be repurposed.
- These are the types of large-scale projects that revitalize entire neighborhoods, generate significant job growth, and result in widespread community improvement. Section 1031 is an effective tool to encourage this activity while avoiding market disruptions. Allowing businesses to continue to utilize Section 1031 prevents many assets from becoming shuttered blight.
- Additionally, recent economic impact studies concluded that like-kind Exchanges are a powerful stimulant of transactional activity that, in addition to the benefits described above, generates significant local and Federal tax revenue and contributes to the health of the U.S. economy. The studies found that exchanging buyers make real estate investments that are substantially greater than non-exchanging buyers, resulting in improved communities in which to live, work and play. These studies quantified that limiting or repealing Section 1031 would cause significant economic contraction and job loss.
Most importantly, under Section 1031, taxes are merely deferred, not eliminated.
The Guys With All The Answers…
David and Thomas Moore, the co-founders of Equity Advantage & IRA Advantage
Whether working through a 1031 Exchange with Equity Advantage, acquiring real estate with an IRA through IRA Advantage or listing investment property through our Post 1031 property listing site, we are here to help Investors get where they want to be. Call them today! 503-635-1031.
