Specifically, the White House seeks to impose a $500,000-per-person limit on the aggregate amount of gain that a taxpayer can defer each year, with any excess gain recognized in the year of the exchange. 9 The version of the act that passed the House (stalled in the Senate as of this writing) did not include any changes to IRC §1031.
At least for the near future, §1031 exchanges appear to be safe from legislative change. In a properly structured transaction, you may continue to sell a rental property and purchase a replacement property without having to recognize the capital gains. A taxpayer may repeat this process multiple times, without limitation, until death, with the cost-basis of the property being “stepped-up” to its fair market value at the date of passing.
RICHARD D. GANN, JD Managing Partner 1031 Capital Solutions (800) 445-5908 1031CapitalSolutions.com
Richard (Rick) Gann is an attorney, licensed real-estate broker, and general securities principal specializing in 1031 exchange solutions and he is co-author of the book “How to Retire from Being a Landlord”.
Much of this article was excerpted from the author’s book, How to Retire from Being a Landlord. 1. U.S. Constitution Amend. XVI 2. Brushaber v. Union Pacific Railroad Co., 240 U.S. 1, at 20 (1916) 3. Eisner v. McComber, 252 U.S. 189, 207 (1919) 4. Borden, Bradley T. Tax-Free Like-Kind Exchanges. Kingston: Civic Research Institute, 2015, at 1.2 5. H.R. Rep. No. 73-704, at 13 (1934), from Borden, supra 6. Borden, supra, at 1.2 7. Starker v. United States, 602 F.2d 1341 (9th Cir. 1979) 8. Treas. Reg. § 1.1031(k) 9. https://home.treasury.gov/policyissues/taxpolicy/revenueproposals
DISCLAIMER: Because investors’ situations and objectives vary this information is not intended to indicate suitability for any investor. This is for informational purposes only, does not constitute as individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance. IRC Section 1031 is a complex tax concept therefore you should consult your legal or tax professional regarding the specifics of your situation. There are material risks associated with investing in real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. 1031 Capital Solutions is independent of CIS and CAM.
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