Important Updates on 1031 Like-Kind Exchanges from Capitol Hill
We want to provide an important update regarding 1031 Like-Kind Exchanges.
Over the weekend, the House Ways and Means Committee released a list of potential tax provisions in the reconciliation bill to “pay for” the Administration’s “Build Back Better” Agenda. Because of the work of the IPA and our partners, 1031 like-kind exchanges have, thus far, not been offered as a potential pay for. However, we are still early in the process and are advocacy must remain strong, vigilant and engaged.
The House Ways and Means Committee will be continuing its work this week in marking up the reconciliation bill as the bill then moves to the House Floor and then to the Senate. We must stay focused on the House and Senate members to protect the current taxation of 1031.
As a reminder, earlier this year, as part of its American Families Plan, the Biden administration recommended capping Section 1031 like-kind exchange treatment to gains of $500,000 per individual, and $1 million per couple, to capture what they estimate to be $20 billion in savings over the next ten years.
The IPA has worked tirelessly to oppose any limitation of Section 1031. In July, our members took part in a targeted fly-in to voice their concerns and emphasize the important role like-kind exchanges play with key members of the Senate Finance Committee and House Ways and Means Committee. Our members are soon participating in a second targeted fly-in to continue to press upon legislators the critical importance of 1031. Those members include Congressman David Scott (D-GA) and Senator Catherine Cortez Masto (D-NV). Just last week, Rep. Scott, Chairman of the House Committee on Agriculture, sent a letter to Chairman Neal expressing his concerns about how changing Section 1031 would negatively impact farm and ranch families. Sen. Cortez Masto is a member of the Senate Leadership, serves on the Senate Finance Committee, and is a critical voice in the reconciliation process.
The IPA has engaged in direct and grassroots advocacy throughout this process, with thousands of constituent letters reaching legislators. We also worked on grass-tops op-eds to targeted legislators’ districts. We co-led a media engagement effort directly to the tax writing committee members and staff, and worked with our coalition partners on a letter last week to Congressional leadership and House Ways and Means and Senate Finance Committee Members, urging preservation of like-kind exchanges. To date, we are focused on sharing with lawmakers the important stories of underserved communities that have benefited from 1031 like kind exchanges. We would also like to extend our appreciation to the 1031 Coalition led by the Real Estate Roundtable. The collective efforts of coalition members amplified the critical role 1031 plays in our economy.
Now is the time reach out to your Senators and Members of Congress to communicate the importance of retaining Section 1031 like kind exchanges without size limitations. Please visit the IPA’s 1031 Resource Center for more information and updates, and where you can engage directly with your Congressional delegates.
SVP, Government Affairs and General Counsel
Institute for Portfolio Alternatives