Section 1031: Vital to Pro-Growth Tax Reform

As Congress considers tax reform and potential areas of revision to the U.S. tax code, a section of the code that ought to be preserved is Section 1031, like-kind exchanges. Part of the tax code for nearly 100 years, 1031 exchanges allow taxpayers to defer taxes on the sale of assets when they invest the returns into assets of like-kind. Section 1031 is a tax strategy that has been proven to encourage growth, expansion, and reinvestment back into the economy.  If anything, like-kind exchanges should be expanded as a model of pro-growth tax reform.

1031 Supports Strong Tax Policy

1031 exchanges support strong tax policy by stimulating the economy with transactional activity and preventing the taxation of cash flow where there is a "continuity of investment." Like-kind exchanges, often associated with real estate, are employed in a myriad of industries, including manufacturing, transportation, agriculture, construction, and more.

The House blueprint for tax reform titled "A Better Way" is the expected model for 2017 tax reform, but it leaves a lot of unanswered questions for U.S. business owners who need the ability to expand operations, hire employees, and acquire equipment, and secure land and facilities.

The House blueprint does not specifically mention preserving or repealing Section 1031, but, according to an article in the REALTORS® Action Center blog, House Ways & Means Committee Chair Kevin Brady (R-TX) has "admitted the committee is considering eliminating the provision."

Help Preserve 1031 Like-Kind Exchanges

Repealing 1031 would reduce investment and entrepreneurial incentive, shrink the economy by increasing the cost of capital, and hamper the ability of U.S. businesses to be competitive in a global marketplace. Let your congressmen and women know that preserving 1031 like-kind exchanges is important to you and your business.

Act Now! Visit to easily let Congress know that 1031 exchanges should be preserved.

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