CRE Industry to Congress: You Can Take Back 1031 Exchanges When You Pry Them from Our Cold, Dead Hands
An article appearing on the CoStar Realty Information website reports on a new microeconomic study sponsored by commercial real estate groups. The new study by Professors Ling and Petrova, “The Economic Impact of Repealing or Limiting Section 1031 Lke-Kind Exchanges in Real Estate,” is being used by commercial real estate groups to help protect Section 1031 like-kind exchanges from repeal legislation.
The proposed legislation by Democratic presidential candidate Bernie Sanders and Congresswoman March Kaptur, the “Keep Our Pension Promises Act of 2015,” would limit Section 1031 similar to the President's FY 2016 budget proposal. The legislation would create a legacy fund benefiting retirees participating in financially-troubled multiemployer pension plans.
The presence of this legislation has commercial real estate interest groups concerned about the implications of a repeal. “The fact that this legislation is out there underscores the need to educate and inform Congress on how like-kind exchanges are executed and how common and typical they are in real estate transactions,” said Ryan McCormick, of the lead sponsor of the study, The Real Estate Roundtable.
The Ling and Petrova study and the Ernst & Young macroeconomic study released in March 2015 show the damage caused by eliminating like-kind exchanges with no real benefit in boosting tax revenue, said John Harrison of ADISA, a co-sponsor of the study. “We haven't found anybody in Congress that once they see the data, believes we should eliminate 1031 exchanges,” he said.
The FEA is among the group of co-sponsors of the study.