By Lucas Ecklund-Baker
Like-kind exchanges are used throughout the country in many types of commercial real estate. An International Council of Shopping Centers (ICSC) newsletter article says that proposals to gut Section 1031 like-kind exchanges are making shopping center investors jittery.
Citing the Ling-Petrova and Ernst & Young studies on the economic impact of a repeal or modification of Section 1031, the article points out that the tax deferral benefit results in most taxes being paid, not eliminated. Section 1031 has remained on the books because it creates an incentive for taxpayers to make capital investments in physical business assets. The resulting activity is good for the economy.
“Reform through repeal of 1031 is an oxymoron–you take that provision away and property owners would hang onto properties longer, it would freeze liquidity in the marketplace and in general have a negative effect on the real estate industry," says Keith Lampi, president and COO of Inland Private Capital Corp.