National Association of REALTORS Sends Letter to House Small Business Committee About 1031 Exchange

Apr 27th, 2017

On Tuesday the National Association of REALTORS® sent a letter to Rep. David Brat, the Chairman of the House Small Business Committee who also serves on the Subcommittee on Economic Growth, Tax, and Capital Access, and to Rep. Dwight Evans, the Ranking Member in the House Small Business Committee who also serves on the Subcommittee on Economic Growth, Tax, and Capital Access. Here is an excerpt:

"Congress must also preserve those sections of the Internal Revenue Code that are crucial to the creation and preservation of businesses and jobs in the U.S. In particular, like-kind exchanges under section 1031, which allow taxpayers to exchange business and investment property for like-kind property, must be retained in any tax reform legislation. Like-kind exchanges are a critical tool for equity building for small businesses, reducing the need for third-party financing. As mentioned above, small businesses have less access to capital markets, and often struggle to obtain financing from banks and traditional lenders. Like-kind exchanges help them grow organically, without overreliance on debt and leverage. Because owners are able to reinvest all of their equity without reduction for taxes, they put more of it into their transactions. Thus, properties acquired in a like-kind exchange are subject to a much smaller overall debt burden."