1031 Exchanges: Their Benefits & A Defense of Their Use
Since 1921, section 1031 exchanges have been an important part of the tax code. They have served as a vital and dependable stimulant not only to the real estate market but to the broader economy, yet nearly every election cycle there are always attempts to repeal them or restrict their use either through legislative actions or agency rule changes. These attempts stem from, among other things, suspicious attitudes about tax incentives for capital holders, negative press about “real estate moguls” and “big corporation”, and the widespread misunderstanding of key tax concepts such as reinvestment of capital, like kind, basis, deferral, and depreciation. This report will explain the benefits of 1031 exchanges and how they positively affect both real estate markets and the larger economy as a whole.