How did 1031 Exchange do in the New Tax Law?
First, the bad news, personal property 1031 Exchanges are, now, not allowed. If you started your personal property 1031 Exchange prior to January 1, 2018, you can still finish it. But, moving forward, personal property can no longer receive 1031 Exchange treatment. This mostly affects fleet exchanges (i.e. semi-trucks and rental cars), antique dealers, airplane owners, heavy equipment, etc.
The good news, however, is that the tax reform does not affect the 1031 deferral of real estate. Taxpayers can continue to use the powerful investment tool of Section 1031 Exchange for the Exchange of commercial properties, residential properties, industrial properties, vacant, farms, ranches and even mineral interests.
So, while it is unfortunate to see personal property 1031 Exchanges go, it is a relief to many real estate investors to know that the new tax reform does not take away a significant real estate investment tool, the 1031 Exchange of real estate.
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