President Biden's proposed cap on Section 1031 like-kind exchanges would drastically curtail economic activity and effectively cripple CRE markets, according to a new analysis by Ernst & Young using Federation of Exchange Accommodators data.

Section 1031 exchanges are predicted to add 568,000 jobs and $27.5 billion in labor income to the national economy and $55.3 billion to the US gross domestic product in 2021, according to the FEA. E&Y also says like-kind exchanges will generate approximately $7.8 billion in federal, state and local taxes this year. Foregone depreciation on replacement properties will generate $6 billion per year in income tax revenue.

The Biden Administration has proposed capping gains deferred under 1031 exchanges at $500,000 as a means of paying for the $1.8 trillion American Families Plan.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.