What Should Congress Know About Real Estate?
In the past and present, the 1031 Exchange has been under scrutiny in congress. It is one of the last structures available that allows an investor to delay taxation on income. What is the 1031 exchange and why is it such a big deal? In a 1031 Exchange, the IRS allows the investor to sell a property that they own to purchase 1 or more properties of equal or greater value. The intention of the exchange is to encourage continual investing. This gives a substantial boost to economic activity and inevitably affects everybody.
The 1031 Exchange is not a tax exemption. If/when an investor decides that he/she wants so sell and collect on the proceeds, the IRS now is able to tax this. Because of the tax exemption, the IRS has actually influenced the investor in providing it a larger income upon which to tax. So everybody is happy. The Investor, IRS, and everyday consumer is economically benefited by the 1031 Exchange.