Top 10 Commercial Real Estate Moments of 2013

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on Dec 31, 2013

How about the proposal to eliminate 1031 exchanges as pat of Baucus and Camp's tax reform?As a real estate professional, I fear that eliminating the tax rules for 1031 like-kind exchanges could be a catastrophic threat to the real estate market or even bring it to a grinding halt as investors will have a strong disincentive to sell their property, causing property values to plummet.
The real estate market has been one of the few bright and productive sectors of the economy for at least the last 40 years, and one that continues to produce strong middle class jobs.
1031 exchanges have been a valuable tool in providing a strong incentive for real estate investors to reinvest the proceeds of their sales equal to or greater in value. Eliminating this incentive will cause investors not to sell, and will drive the value of property downwards, and the cost of rents, and anything sold by the tenant, up. Not only do many states rely on property tax for revenue (some completely), but Wall Street has been heavily invested in mortgage backed securities and REITS. A downward trend could send both the real estate and equity markets into another crash.
Eliminating 1031 tax deferred exchanges would not only cause instant job losses to the real estate industry, but could propel us back into another recession.

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