President Trump signed into law the Tax Cut and Jobs Act taking effect January 1, 2018, changing the 1031 tax deferred exchanges that were first imposed in 1921. The major change to the 1031 code is the removal of tax deferral treatment for tangible and intangible personal property, including assets such as collectible cars, aircraft, gold and silver bullion, equipment, cars and trucks, franchise fees and licenses. Tax deferred exchanges for real property were maintained.Read More
How will the current legislation to maintain the Bush era capital gains tax impact the number of 1031 exchanges and investment property? As a fiscal conservative, I believe over the next two years real property held for investment will continue to stagnate or show little appreciation with the exception of those geographies with job growth translating into demand for housing.
1031 exchange 45 day identification and 180 day exchange periods can be extended by Presidentially declared disasters, terroristic or Exchangors serving in combat zones. Extensions apply to both forward and reverse 1031 exchanges.
Tax-Free Exchanges make sense when federal and or state capital gains taxes and recaptured depreciation exist. Are they really tax free? No, the taxes are simply delayed or postponed until the replacement property sells. Another 1031 exchange can be initiated as many times as desired continuing to defer the capital gains tax.
Have you ever been so focused on issues like 1031 exchanges and lost sight of the humor surrounding us? Every now and then it is important to sit back, look and listen.
When considering engaging a Qualified Intermediary (QI) to accommodate a 1031 exchange there are a number of factors that should be considered.