TAX Reform On The Horizon
A new Administration and new make-up of Congress pretty much guarantees that there will be tax reform legislation in 2017.
Whenever Tax Reform is considered, I.R.C. Section 1031 - Like-Kind Exchanges, is put on the chopping block. Section 1031 allows an owner to sell an income producing property, such as land or buildings, then purchase a different income producing property and transfer the tax basis of the sold property to the purchased property. It does not eliminate a capital gains tax, but defers the gain until the property is sold at some point in the future.
The House Republican Version for Tax Reform proposes full expensing for all capital asset acquisitions, including land improvements, but not land. As an offset to immediate expensing, taxpayers would no longer be able to deduct their net interest expense and there is potential for Congress to remove the 1031 provision altogether.
IPE-1031 provides intermediary services for transfers using Section 1031. Their website offers information and explanation about the use and process necessary to complete a Section 1031.
If Section 1031 is important to you, or others you do business with, then it is necessary to contact your Congressional Representatives and voice your opinion. You can contact them direclty or send a letter through the following portal: Take Action to Preserve Section 1031.
Terry Pauling is a Broker & REALTOR® at EXIT Realty North Star, 222 W Salem Ave. Indianola, IA 50125. We provide full-service real estate services to the Indianola, Warren County and Des Moines, Iowa metro areas. Find Links and contact information for Terry at www.exititown.com. (C) 515-249-9192
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