Joe Biden went after one of the real estate industry’s favorite tax benefits Tuesday when he proposed funding a child- and elderly-care spending platform by closing off a loophole used by property investors.
The presumptive Democratic presidential nominee proposed eliminating 1031 “like-kind” exchanges for investors with annual incomes greater than $400,000, as part of his plan to finance $775 billion in government spending over the next 10 years on child care and care for the elderly.
But real-estate industry experts noted efforts to eliminate 1031 exchanges have been made before. The reason the tax benefit still stands, they said, is because lawmakers recognize its positive impact on the economy.
“They’ve talked about getting rid of 1031s for years, so I’m not surprised it would be in the Biden plan,” said Stuart Saft, head of the real estate department at law firm Holland & Knight. “Whenever Congress looked at these things, it’s been preserved.”
Saft stressed that eliminating the exchange at a time when the real estate industry is reeling from the coronavirus would be a major blow to the struggling economy.
“It would just pull the rug out from underneath a very huge part of the economy,” he said.
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