U.S. Economy Would Lose $8.1B Without 1031

If Section 1031 like-kind exchanges were repealed, the nation’s economy would shrink by an estimated $8.1 billion even when combined with lower tax rates, a new analysis found. The higher cost of capital would discourage business investment – which adversely affects the overall economy, according to the Ernst & Young Section 1031 Economic Study. Since the 1920s, the like-kind exchange rules have allowed for the deferral of capital gains tax and ordinary income tax on business or investment property if the property is exchanged for like-kind business or investment property. Section 1031 like-kind exchanges spur investment and reinvestment in U.S. assets, and make it easier for taxpayers to relocate or upgrade into assets that better meet their business needs. C.A.R. President-elect Dan Wagner of The Inland Real Estate Group spoke at the news conference announcing the study’s findings on Tuesday, March 17. “Since the 1980s, like-kind exchanges have evolved into an even more dependable and mature growth engine for the American economy,” Wagner said. The study found that repealing Section 1031 would: • Result in less federal revenue • Shrink the economy by $8.1 billion • Discourage investment • Negatively impact the overall economy, with an unfair concentration in certain industries • Unfairly burden certain businesses and taxpayers • Counter the goals of tax reform Email your congressional representative to ask they oppose the proposal to repeal like-kind exchanges.