A survey released by the NAR shows that real estate like-kind exchanges remain an important tool in the way that real estate professionals do business.
Like-kind exchanges, also known as Internal Revenue Code Section 1031, give individuals and businesses a tax deferment on gains after they get rid of one property, as long as the proceeds are reinvested in a similar property. These types of exchanges are available to individuals, partnerships, corporations, limited liability companies and trusts.
The 2015 Like-Kind Exchanges: Real Estate Market Perspectives Report found that NAR’s commercial and residential members believe these tax provisions are necessary for gaining and disposing properties, and helping to fuel the country’s economic and job growth.
Real estate investors and commercial property owners agree that like-kind exchanges are highly valued in their business. 40 percent of respondents said that transactions would not have occurred without this tax provision, and 96 percent believe that real estate values would go down if they were repealed.
Like-kind exchange participants use them for many reasons besides deferring capital gains taxes. Reasons include gaining equity to buy more properties, estate planning, portfolio diversification and completing development projects.