Hat tip to GM for pointing this out – did you know that the Obama Administration has been trying to modify the 1031 exchange rules?
Potential sellers of investment properties are already paralyzed by the thought of the excessive taxation by federal and state governments. The 1031 exchange allows properties to be sold and the excessive taxation be deferred – any limiting of the 1031 rules will cause fewer transactions.
If this change is implemented, it will apply to 1031-exchanges that are completed after this year. If you want to upgrade your investment portfolio, let’s move!
The proposal would limit the amount of capital gain deferred under section 1031 to $1 million (indexed for inflation) per taxpayer per taxable year. The proposal limits the amount of capital gain that qualifies for deferral while preserving the ability of small businesses to generally continue current practices and maintain their investment in capital. In addition, art and collectibles would no longer be eligible for like-kind exchanges. Treasury would be granted regulatory authority necessary to implement the provision, including rules for aggregating multiple properties exchanged by related parties.
The provision would be effective for like-kind exchanges completed after December 31, 2016.
Other existing rules: