The 2015 Like-Kind Exchanges: Real Estate Market Perspectives Report of NAR’s commercial and residential members believe these tax provisions are necessary for gaining and disposing properties, and help fuel the country’s economic and job growth.
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 of one property as long as the proceeds are reinvested real estate. These types of exchanges are available to individuals, partnerships, corporations, limited liability companies, or trusts.
REALTORS® participate in like-kind exchanges for many reasons besides deferring capital gains taxes; they use them as equity to buy more properties, as well as in estate planning, diversifying their portfolio, and completing development projects.
Of those surveyed, 86 percent said these tax provisions allowed them or their clients to invest and make improvements in other properties, helping to create more construction and other jobs. Overall, 63 percent of respondents said they participated in a like-kind exchange transaction during 2011-15, which created between 10 and 35 new jobs.