The almost-1000 page discussion draft of comprehensive tax reform proposals that was released a few weeks ago contains many surprises, both big and small. One of the biggest is the proposal to repeal Code §1031, thus putting and end to tax-free exchanges after the year 2014. Most early tax reform proposals never get enacted as originally proposed, and I don't think this specific proposal will either. But for those of us with clients who may be affected by §1031's elimination, or who may be affected ourselves, it is one worth keeping an eye on.
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Roland Slugg
"I do what I can." -
Do you have a link to this proposed reform package? -
Unintended Fallout
Ah yes! How else to raise the taxes on the "greedy rich" by taking away the §1031 LKE?
I've been through many of the "soak the rich" proposals before. Some of them survive, some do not.
Three times during my lifetime, for example, they have taken away "capital gains" advantages.
...and three times the capital gains advantages have been re-instated.
The result of many of these tax increases involving real estate has usually been horrible for the economy.
For most of the economy to move, real estate must move. The effect of proposals such as this one is
that property owners just won't sell. Or if they DO sell they sell only at enough of a price to pay for the
extra taxes. Buyers can't MAKE them sell, and they are usually unwilling to cough up huge increases in
what they have to pay for property.
The capricousness and utter stupidity of this rivals the "1099s to everyone" idiocy a couple years ago.Comment
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