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Fallout from Campaigns Puts Negative Spotlight on Real Estate Deductions and Like-Kind Exchanges

October 12, 2016 by click for contact info
Posted in News, 1031 Exchange News

When rhetoric in the presidential campaigns turned to Donald Trump’s taxes, substantial negative press came out on deductions available to real estate investors, like-kind exchange rules in particular. And it wasn’t just the press, former presidential candidate Senator Bernie Sanders has indicated intent to introduce a bill in 2017 with changes to the like kind rules.

Read on to learn the particulars and what you can do in support of this important investment strategy.

The FEA brings you this Member Alert

Press Coverage of Donald Trump’s Personal Taxes Turns Focus to Real Estate Deductions, Like-Kind Exchanges

A Negative Tone

As a result of New York Times articles criticizing Donald Trump on his personal taxes, focus on real estate deductions has included several references to like-kind exchanges in the press, many with a negative tone.

Politico’s Morning Tax introduced a Washington Post article with this:

You’ve heard over the past few days how the real estate industry gets especially favorable treatment from the tax code, through cushy depreciation rules, special like-kind rules and other perks. The Washington Post, using data from Aswath Damodaran of New York University, put into numbers just how nice a setup real estate has – an average effective tax rate of 1.1 percent. (Trucking, on the other hand, is saddled with a 31.2 percent rate.)

Several other articles have mentioned like-kind exchanges in a negative tone, including:

As a result of the increasing intensity of the presidential campaign, negative articles on real estate and Section 1031 have increased in tempo and volume. The articles perpetuate several misconceptions, and are nonetheless being read and may be referenced by tax writing lawmakers.

Senator Sanders’ Press Release

In keeping with the presidential campaign and the dust-up on Trump’s personal taxes, Senator Bernie Sanders (I-VT) has issued a press release outlining plans for a bill in early 2017 that would include changes to like-kind exchanges.

Counterpoints and Actions You Can Take

Please take a look through these articles featuring negative press coverage. Many of the arguments against like-kind exchanges are based on misconceptions about Section 1031 that FEA and real estate coalition partners have worked hard to dispel. David Franasiak was interviewed this week by Bloomberg BNA, which referenced the Ling-Petrova study and letters FEA and our partners have sent to lawmakers.

Additionally, an op-ed article written by Jeff DeBoer of the Real Estate Roundtable was featured as a counterpoint to the October 5, 2016 USA Today Editorial Board viewpoint.

FEA members are encouraged to comment and vote on the USA Today opinion pieces today.
Be sure to vote twice: 1) Vote “Strongly Disagree” with the Editorial Board’s opinion, and 2) vote “Strongly Agree” with Jeff DeBoer’s opinion.

FEA legislative efforts and our educational campaign have helped to educate lawmakers, but more help is needed. There are several actions FEA members can take to help defend like-kind exchanges and support the FEA’s efforts to preserve the provision and the industry:

  • Consider an additional contribution to the FEA to support our legislative and outreach efforts. Contact Lynn Harkin at director@1031.org.
  • Ask the key contact of your company to sign a Permission to Solicit form for the FEA 1031PAC. PAC contributions are made by individuals.
  • Volunteer your time and effort with the FEA
  • Discuss your questions and concerns with FEA President Steve Chacon at stevec@accruit.com or (303) 865-7316.

You can do a lot to help. Start by making sure that your elected representatives know you support IRC §1031 exchanges and in particular the like-kind rules. If you have any questions, give us a call, or visit http://www.1031.org/ for more information.

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