Recent tax increase proposals seek to limit or eliminate current law Section 1031 tax deferral on like-kind real property exchanges. The most recent proposal calls for limiting the tax deferral to capital gains of no more than $500,000.
There is also a proposal to impose a capital gains tax upon death on the estates of individuals who die owning assets with more than $1 million of unrealized gain (not counting equity in a principal residence of up to $250,000). For this purpose, an unrealized gain simply means the amount of gain that would be taxed IF the property were sold at its current value.
There is also another proposal to double the capital gains tax rate for individuals with income of over $1 million.
SIOR, in collaboration with the National Association of Realtors®, and the other NAR commercial Affiliates (CCIM, IREM, RLI, CRE) conducted a survey of its members to compile cases and stories of the benefits of 1031 transactions and the impact of a higher capital gains tax on real estate investments.
The information and stories will be used to educate Members of Congress as to why the 1031 like-kind exchange should be retained and about the economic harm of a much higher capital gains tax rate and of taxing unrealized gains at death, particularly among SIOR members.
1031 Resources (PDFs)