In 1921, Congress enacted the Revenue Act of 1921, which created the predecessor of the 1031 exchange. In this article, we’re going to talk about this predecessor of the 1031 exchange and why it was created in the first place.
Precursor to Section 1031
This was enacted right after World War I. In order to pay for the costs associated with the first world war the United States had tax rates as high as 73%. Congress made a decision to enact changes geared at jump starting the economy after the war ended. To that end, they lowered taxes and created new incentives for taxpayers to keep investing and reinvesting their money in the economy.
This early iteration was intended to promote transfers, prevent the lock-in effect, and more. Without this type of incentive, many taxpayers simply won’t sell their property. Owners of apartment buildings will say: “there’s no reason to go from good to great if I have to give away my hard-earned equity.”
1031 Exchange Your Investment Real Estate
If you are an owner of investment real estate, you might be able to avail yourself of the tax-saving benefits of a like-kind exchange. At CPEC1031, LLC we focus specifically on helping taxpayers with exchanges of like-kind real estate. If you have questions about the 1031 exchange process or want to learn more about its benefits, don’t hesitate to contact the qualified intermediaries at CPEC1031, LLC today. You can find our offices in the heart of downtown Minneapolis. We provide like-kind exchange services throughout Minnesota and across the country.
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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