Real estate investors may remember the Biden administration’s proposal to put a cap on 1031 exchanges last year, but the proposal never made it very far. Commercial real estate lobbyists descended on Washington, D.C., convincing congressmen and women against the move. It may come as a surprise then that the Biden administration has announced the same exact proposal again for its Fiscal Year 2023 budget. “Ten thirty ones,” also known as like-kind exchanges, are easy targets for politicians, who see them and the real estate industry as tax revenue generators. The likelihood that Biden’s 1031 exchange proposal gets passed is slim, but that doesn’t mean commercial real estate professionals should rest on their laurels.

Dan Wagner, Senior Vice President of Government Relations at the Inland Real Estate Group of Companies, told me, “It’s basically groundhog’s day again” when it comes to Biden’s proposal about 1031 exchanges. But Wagner emphasized that budget proposals are political documents and not necessarily what gets passed. On the campaign trail, Biden proposed to eliminate 1031 exchanges, and many view the often-used part of the tax code as a loophole designed for the ultra-wealthy. But if you talk to anyone in real estate, you realize the benefits of 1031 exchanges, not just for the wealthy but for small investors and real estate owners everywhere.

An easy target

A 1031 exchange is a process of swapping real estate in order to defer all or most capital gains taxes. Like-kind exchanges allow real estate owners to swap out current investments and

The post Real Estate is Gearing Up to Defend 1031 Exchanges Yet Again appeared first on Propmodo.