BNA: Attorneys Blast Sanders’ Plan for Real Estate Tax ‘Loophole’
By Allyson Versprille
October 5, 2016
“Tax attorneys would like people to stop using the term ‘loophole’ to describe common real estate practices,” begins an October 5, 2016 BNA article about Senator Bernie Sanders’ (I-VT) plan to eliminate several deductions available to investors in real estate. The article explores several reactions to Senator Sanders’ news release on October 4, 2016. Section 1031 like-kind exchanges are mentioned in Senator Sanders’ plan.
Attorney David Franasiak, who represents the Federation of Exchange Accommodators, is among several interviewed in the story. He is troubled by the characterization of like-kind exchanges as a loophole. “[Section 1031] is good policy. It promotes economic growth. It promotes jobs,” he said. Also quoted in the article, attorney Charles T. Nunnally III points out that like-kind exchanges are not tax avoidance, but a “tax deferral because you’re reinvesting the proceeds and if you don’t reinvest all of the proceeds, you have to pay tax on it.” Franasiak said that the provision has remained in the tax code because it helps small and medium sized businesses grow.
The article references the Ling-Petrova study, stating that repeal of Section 1031 like-kind exchanges would reduce property values, increase rents, and result in a decline of real estate activity.