Many people are critical of section 1031 and argue that it is essential a mechanism for dodging taxes. However, section 1031 is not a tax-dodging tool (it only defers taxes that must be paid at a later date). In fact, section 1031 is extremely beneficial for building communities. In this article, we are going to discuss how 1031 exchanges of real estate can help build and benefit communities.
1031 Exchange Benefits for Communities
There are many ways that 1031 exchanges help build and benefit communities. Here are a few:
They allow capital to flow more efficiently into different segments of the market.
They encourage savings and investment in the US economy.
They stimulate the economy and help create jobs.
The Other Side of the Argument
Opponents of section 1031 argue that 1031 exchanges allow investors to avoid paying capital gains taxes that would otherwise go to the federal government. This is true, but also a bit short-sighted. If 1031 exchanges were abolished tomorrow, investors would be forced to pay capital gains taxes on their real estate sales. However, this would also discourage investors from selling in the first place. 1031 exchanges are beneficial in the long-run because the encourage investors to keep reinvesting their capital into new property – thus benefiting their communities.
Get Help with Your 1031 Exchange
If you are looking for help with your 1031 real estate exchange, you’ve come to the right place! The qualified intermediaries at Commercial Partners Exchange Company have over two decades of experience helping clients through the ins and outs of the like-kind exchange process. We have the knowledge and the expertise needed to ensure the success of your transaction. Contact us today at our downtown Minneapolis office to learn more. We work with clients in Minnesota and across the United States.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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