The Uncertain Future of 1031 Exchange Rules by John G. Ebenger, CPA

Posted on March 06, 2015 by John Ebenger

Under current Internal Revenue Code section 1031, taxpayers who sell business or investment property and reinvest the proceeds in a new, “like-kind” property may defer taxes at the time of the exchange, provided the assets are “held for either productive use in a trade or business or for investment.”  Taxpayers may change the form of an investment, when properly structured, roll over the realized gain to another investment and avoid current year taxes on the gain until many years later.   However, this popular investment vehicle faces an uncertain future under the

new Congress and President Obama’s 2016 budget proposal. Last year, in an effort to raise revenue, several tax reform proposals called for limiting or eliminating like-kind exchanges.  Most recently, the president announced capping the amount of capital gains one can defer from 1031 exchanges to $1 million per taxpayer per taxable year, lengthening depreciation schedules and excluding art and other collectibles from like-kind assets.   The advisors and accountants with Berkowitz Pollack Brant have deep experience working with businesses and investors to implement strategies, such as 1031 exchanges, to preserve wealth and maximize tax efficiencies.  They will continue to keep a watchful eye on Washington’s next steps.

About the Author: John G. Ebenger, CPA, is a director in the Real Estate and Tax Services practice at Berkowitz Pollack Brant. He can be reached in the Boca Raton CPA firm’s office at (561) 361-1010 or via e-mail at