Real estate investors on high alert for changes related to 1031 exchange – Business Daily News

When President Joseph Biden took office earlier this year, many real estate investors were on high alert for policy changes that could affect their wealth, an article by WealthManagement noted on Friday. One of the biggest concerns was that the 1031 exchange might be back on the chopping block.

The 1031 exchange enables senior homes and other property investors to defer capital gains taxes on property sales when profits are reinvested in similar or equivalent properties.

Additionally, the ability to make a 1031 exchange and defer capital gains taxes for a long time has been part of many people’s retirement plans, so abolishing the 1031 could significantly affect the ability of some older adults to retire as they would have less to invest what may affect their lifestyle in the future.

While this was raised as a possibility during Biden’s presidential campaign, changing or removing this popular tax deferral technique has not yet been part of any of the tax reforms proposed by the new administration. Given a potential $ 2 trillion infrastructure bill currently in circulation, industry insiders are watching similar exchanges as a potential funding mechanism for the measure, another WealthManagement article said Monday.

It’s not the first time 1031 exchanges have been scrutinized, but some experts say their current elimination would further disrupt the commercial real estate industry at a time when it is already facing unprecedented challenges from the COVID-19 pandemic .

“Given these factors, many commercial real estate executives continue to hope that the Biden administration will avoid changes to 1031 exchanges and seek other sources of funding to pay for expanded services and infrastructure improvements,” the broadcaster concluded.