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May 5, 2020 By Lynn Harkin

FEA Sends Letter to Tax Foundation Regarding Immediate Expensing of Real Property Structures

On May 5, FEA sent a letter to the Tax Foundation regarding the immediate expensing real property structures.

The Tax Cuts Jobs Act in 2017 (TCJA), as enacted, allowed for the immediate expensing of personal property only, subject to a phase out period, but exempted residential and commercial real property. The major real estate business associations and the FEA continue to oppose immediate expensing of real property.

It is our view and the view of many in the commercial real estate industry that immediate expensing is not appropriate for long-life assets like real estate but is appropriate for short-life assets like equipment which can and has provided an economic boost without distorting the economy. Like-kind exchanges under existing IRC Section 1031 provide the same economic incentive to reinvest in investment or business-use real property with the same ability to shelter the gain and defer an immediate tax impact, but without the danger of market distortion.

Click here to view the May 5 letter to the Tax Foundation.

Filed Under: FEA, FEA §1031 Activity Tagged With: 1031 exchange, Immediate Expensing, Like Kind Exchanges

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Section 1031 Complements Tax Reform, Adds to Growth

IRC Section 1031 like-kind exchanges help a taxpayers at all levels expand their businesses and invest for the future, with a significant positive impact on economic growth. Like-kind exchanges are used widely in the real estate, transportation, agriculture, conservation, equipment leasing, rental vehicle and construction industries. Section 1031 contributes significantly to American jobs, investment, tax revenue, and the health of the U.S. economy.

Section 1031 complements expected tax reform proposals, such as the House Republican Blueprint, and should be retained in its present form. Economic studies found that limiting or repealing like-kind exchanges would result in economic contraction and job loss.

About LKEs

Like-kind exchanges swap property, defer tax, and allow businesses and investors to manage capital. Taxes are eventually paid.

Benefits

Like-kind exchanges promote growth in local communities, federal revenue, and the U.S. economy.

Repeal Issues

Repeal legislation would cause damage to the economy, hurting investors, retirees, renters and other groups.

Economic Studies

Recent analyses of millions of real estate transactions show widespread use of like-kind exchanges by a broad base of taxpayers.

Resources

Find informational handouts and videos in Supporter Resources.
Or, look through our library of official letters and whitepapers.

Take Action

Members of Congress depend on stories from their constituents. Tell your legislators about how like-kind exchanges have worked for you.

Federation of Exchange Accommodators
Lynn Harkin, CAE, Executive Director
Federation of Exchange Accommodators
1255 SW Prairie Trail Parkway
Ankeny, IA 50023
Email: director@1031.org
Phone: 515-244-6515
Fax: 515-334-1174
www.1031.org

Williams & Jensen
701 8th Street, N.W.
Washington, DC 20001
Phone: 202-659-8201
Fax: 202-659-5249
www.williamsandjensen.com

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