Under Section 1031 of the United States Internal Revenue Code, a taxpayer may defer recognition of capital gains and related federal income tax liability on the exchange of certain types of property, a process known as a 1031 exchange. Wikipedia

Real Estate Investments 1031Exchange

The 1031 exchange been part of the U.S. tax code since 1921 and originally covered such situations as when two farmers exchanged livestock. The 1031 exchange is a vital tool for small businesses that allows them to upgrade to facilities that better fit their needs without facing big bills.

This Biden proposal is a main part of the great reset where government will take everything from everyone and many will be happy not owning anything!

The restriction on, 1031 exchanges is not the only major tax reform proposal in the quest for additional tax revenue.  Some of the Biden Administration’s tax positions include raising the marginal income tax rate back to 39.6%, increasing long term capital gains tax rate to 43.4% (39.6% plus NIIT 3.8%) for taxpayers earning over $1 million, reducing itemized deductions for taxpayer with an income tax rate higher than 28%, and eliminating the step-up in basis for assets passed to heirs in estate proceedings.  Many of these provisions, especially the increase in capital gains tax rate and the elimination of a step-up in basis, could have severe negative effects on the real estate market.