Presidential Candidate Joe Biden proposing tax reform which includes the elimination of “like/kind exchanges” ie 1031 Exchanges.
Opinions? Obviously I have horse in this race.

Thanks!
[{"id": "fysm65d", "text": "It will just keep more RE locked up for longer periods of time. Im sure there are other effects. This is no surprise as the narrative is to tax people who have \"more\" to subsidize those that have less. They are under the impression that 1031 exchanges only benefit multi millionaires and billionaires. Im sure there is data out there that outlines the reality but Im willing to bet most 1031 exchanges are not exclusively done by the 1% of Wealth.", "replies": [{"id": "fysnfda", "text": "Agreed. My business mix is 80% 1031 Exchanges, 20% Opportunity Zones. Strictly replacement property buy-side representation. Time to re-evaluate/adjust my business model.", "replies": [], "depth": 2}, {"id": "fytgmox", "text": "Most large CRE players (can\u2019t legally name names) don\u2019t do 10-31\u2019s due to the nature of their fund structures. The long term holders do but they\u2019re typically family office. I would also imagine if anything it helps the lower rung RE players over the \u201c1%\u201d.", "replies": [{"id": "fytkr2x", "text": "Not true, I manage closed end discretionary funds and we 1031 stuff all the time. For our foreign SMAs it\u2019s 100% critical to 1031 they because if there\u2019s any tax taken the foreigner investors can\u2019t / won\u2019t file tax returns so minimizing ANY tax exposure is the name of the game. If something sells for the foreign SMA we need to 1031 it or else they get nailed with a tax bill on it but they won\u2019t file taxes so the money is just gone.", "replies": [{"id": "fytmnoq", "text": "Yours may but my \u201cmost large CRE\u201d firms comment doesn\u2019t apply to everyone, which in this case, is you. Many of my direct clients don\u2019t, some of which are the largest CRE players in the world and thus we have direct access to fund documentation to understand how their funds are structured. Just because it doesn\u2019t apply to you doesn\u2019t mean it\u2019s applicable to everyone.", "replies": [{"id": "fytn4zp", "text": "It applies to us and we have $10bn+. I know AEW, LaSalle, Heitman, others are similar - if your client is going to get walloped by a tax bill they can\u2019t get a refund on you\u2019re going to work to minimize tax exposure. If you\u2019re a closed end discretionary sure whatever you\u2019re not 1031 but a foreign / non-exempt SMA is going to want it.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "fytqvus", "text": "A lot more shitty looking buildings around imo. Businesses that buy, rehab, sell, repeat are going to stop doing so", "replies": [{"id": "fytxzrp", "text": "Right this is my business. It will kill real estate development. The reason we even do big projects is because we exchange into them. It\u2019s usually not worth the risk and headache otherwise and they\u2019re harder to pencil out.\n\nIf you think the housing shortage is bad in California now, this will halt a lot of new projects.\n\nThe good news is for me is that I have a lot of things in the oven at early stages. My timeline to exit a project is 6 years at the soonest. I will just do smaller projects with extra cash flow.", "replies": [], "depth": 3}, {"id": "fyu019s", "text": "You cannot 1031 a property held less than a year, so flipping/remodeling for sale is not eligible for 1031.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fysnqxt", "text": "Why?  That's the opposite of a tax cut.  Cui bono?", "replies": [{"id": "fysp0xt", "text": "Since when has the left ever favored a tax cut - in recent memory?\n\nWe have a spending problem, but instead of fixing spending they want to tax us more.\n\nYay.", "replies": [{"id": "fyspdwk", "text": "Obama extended Bush\u2019s tax cut as part of the Tax Payer Relief Act which resulted in continued tax cuts for 98% of Americans.", "replies": [{"id": "fysq5lr", "text": "You\u2019re proving my point.\n\nO also increased taxes dramatically with the ACA.", "replies": [{"id": "fysqr0a", "text": "Pointing out that he extended cuts to 98% of people\u2019s taxes proves that he raised taxes?", "replies": [{"id": "fyssf8q", "text": "He led the efforts to keep them until a compromise could be reached, which was good governance.\n\nIn the end they were made more or less permanent for most folks.\n\nBush agenda ratified by O.", "replies": [{"id": "fysskfo", "text": "So then my original reply to your statement was 100% correct. Great to see you acknowledge that.", "replies": [{"id": "fyud1i1", "text": "Well, he extended most of a Republicans tax cut, and then greatly increased taxes across a large swath of the economy with the ACA.\n\nSo, yes. We agree but you have to understand what you\u2019re agreeing to.", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fyso07l", "text": "This is a pretty terrible thing if they do that. This will effect even the small investor that has his first building he wants to sell for something else.", "replies": [], "depth": 1}, {"id": "fysq7m6", "text": "1031 exchanges would be spectacular if they extended the identification period, but one of my RE professors did research showing lower long term returns on 1031 as opposed to paying the taxes and resetting.\n\nMy experience, the 45 day exchange period just causes people to overpay or take on riskier investments to cram under the deadline, not to mention the lack of bargaining power when the seller finds out you're on 1031.\n\n[https://www.kiplinger.com/article/real-estate/t055-c032-s014-1031-exchange-should-you-swap-till-you-drop.html](https://www.kiplinger.com/article/real-estate/t055-c032-s014-1031-exchange-should-you-swap-till-you-drop.html)", "replies": [{"id": "fysqy4j", "text": "You\u2019re absolutely correct! You wouldn\u2019t believe how many of our clients refuse to start doing their due diligence, let alone begin to write offers on replacement properties until their sell side transaction has been completed.", "replies": [], "depth": 2}, {"id": "fytiiqr", "text": "Great take.", "replies": [], "depth": 2}, {"id": "fytw3hx", "text": "I agree with you.  Its like a hot potato to some people and they'll buy wrong just to avoid the tax.", "replies": [], "depth": 2}, {"id": "fyu8ccw", "text": "Do you have any other info about your professor's research? The article only scratches the surface of 1031 exchanges", "replies": [{"id": "fyvjvqa", "text": "here's the only research article of his that I found, but it mainly addresses repealing 1031 from a policy perspective (exactly what OP/Biden is asking about).\n\n&amp;#x200B;\n\n[http://www.1031taxreform.com/wp-content/uploads/Ling-Petrova-Economic-Impact-of-Repealing-or-Limiting-Section-1031-in-Real-Estate.pdf](http://www.1031taxreform.com/wp-content/uploads/Ling-Petrova-Economic-Impact-of-Repealing-or-Limiting-Section-1031-in-Real-Estate.pdf)", "replies": [{"id": "fyvvylv", "text": "Thanks for the link! I'll read thru this today - I'm really curious about what your prof argues", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "fyx9st8", "text": "Are you familiar with the deferred sales trust structure, i.e. an installment sale and how those returns differ compared to a 1031 execution?", "replies": [{"id": "fyy7srz", "text": " [https://www.taxlawforchb.com/2019/07/monetized-installment-sales-what-are-they-about/](https://www.taxlawforchb.com/2019/07/monetized-installment-sales-what-are-they-about/) \n\n[http://www.exeter1031.com/1031\\_exchange\\_PLR\\_200648012.aspx](http://www.exeter1031.com/1031_exchange_PLR_200648012.aspx)\n\nNever done one, but my understanding it works really great if you've got lots of small sales you're trying to exchange into a big buy.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fystf3y", "text": "To my knowledge there is no 1031 exchanges for stocks. I think its reasonable to get rid of this for real estate. The long term capital gains rates are low.", "replies": [{"id": "fyvcia3", "text": "Alright there Bernie boy.", "replies": [{"id": "fyvhroc", "text": "...when Biden is the one proposing it.", "replies": [{"id": "fyyqtn1", "text": "Because Biden is a corpse and a puppet that\u2019s been hijacked by the far left.", "replies": [{"id": "fyz432u", "text": "And Trump brags about passing a cognitive test that anyone who is not cognitively impaired should pass easily and calls the last five questions difficult. \n\nAlso, \u201cPuppet, puppet, your the puppet!\u201d-DJT", "replies": [{"id": "fyz45vj", "text": "Alright there Bernie boy.\n\nKids in a CRE subreddit talking about abolishing 1031 exchanges. Fuck outta here.", "replies": [], "depth": 6}, {"id": "fz0o8dc", "text": "you're\\*\n\nAlso, I don't think you understand what 1031 is and are just going along with it because you think it'll hurt 'rich' people. It actually hurts people/businesses who rent property more than anyone else. How? People 1031 money to buy run down properties and fix them up to rent to people who want to live in a building or rent a space for their business. Without that profit from the sale, they wouldn't be able to buy and rehab bigger projects. If you tax 1031 all the time, every logical investor will hold on to buildings for a hell of a lot longer and will not be improving properties around the area. This will increase rent to the point it prices out the average person because there won't be a free market and properties will not be going up for sale as often which increases value, rent, etc. There is a lot to it but it's a macro overview from an investor", "replies": [{"id": "fz0t1gg", "text": "Dude I own a shit ton of multifamily. When someone asks for an opinion I post an opinion. Don\u2019t need you to tell me I don\u2019t know what it is.\n\nEdit: OP should change title to \u201chow mad are you about the proposal to cut 1031 exchanges\u201d", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fyt05kl", "text": "1031 exchanges were already neutered in 2018 to limit them to only real property (and select related rights derived from real property) instead of the laundry list of assets you could formerly exchange.  It was/is only a matter of time before the tax authorities come for the whole thing or further restrict what qualifies as \"in kind\" (no more residential for commercial, single family for multi, improved property for raw land) as to make the process not worth the effort &amp; get those transactions into the taxable realm. \n\nSee recent rule changes around \"stretch IRAs\" for the playbook.", "replies": [], "depth": 1}, {"id": "fytjs8m", "text": "Biggest problem is that unless they materially change how depreciation works this will result in many people who are not willing to own/operate real estate properly being forced to hold assets whereas they could have previously 1031\u2019ed into NNN or DST structure. \n\nIn theory I don\u2019t have an issue with eliminating tax advantages in RE (as long as existing holdings are grandfathered in). I do think it\u2019s unfair to society that RE investors (which are a huge component of HNW and UHNW people) get away with paying $0 in taxes.\n\nI also think this could be structured to prohibit a 1031 on purchases over a certain size - thereby helping smaller investors.", "replies": [], "depth": 1}, {"id": "fyts6za", "text": "I thought I heard that it was for very high income individuals only. Anyone?", "replies": [{"id": "fytyam9", "text": "That\u2019s the dividend tax increases. I believe they want dividends and maybe capital gains too to be taxed at income levels on earnings over 1 million. So no change for your first million of income but after that your capital gains will be hit at the top margin for income tax.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fytsec3", "text": "Am I the only one who hopes they do?  Id love to see the musical chairs that happens when everyone knows you need to realign your portfolio or pay cap gains on every sale going forward.", "replies": [{"id": "fz0tnzo", "text": "Your not the only one but this view point is getting obliterated by down votes", "replies": [], "depth": 2}], "depth": 1}]