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1031 Exchange for Real Estate: Goodbye...

MJ DeMarco

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I see the "get Trump" form of journalism hasn't gone away.


Anyway, looks like the 1031 exchange is probably going to go "bye bye" ...

Still waiting for the announcement that sitting on the toilet will soon also be taxed.

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thechosen1

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I see the "get Trump" form of journalism hasn't gone away.


Anyway, looks like the 1031 exchange is probably going to go "bye bye" ...

Still waiting for the announcement that sitting on the toilet will soon also be taxed.
It's such absolute bullshit how they frame this as a "Trump tax thing" when probably half of congress has used a 1031 exchange before.

Bunch of liars, everywhere.
 

Kak

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It's such absolute bullshit how they frame this as a "Trump tax thing" when probably half of congress has used a 1031 exchange before.

Bunch of liars, everywhere.
America has terminal cancer. We didn’t “catch it early.”
 

thechosen1

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They have to frame it in a way for the idiots to vote "yes". I saw were Creepy Joe 1031 plan was: $500,000.

I can only imagine what that will do to the real estate market.

View: https://www.youtube.com/watch?v=ekCJ2PXRqIc
Graham Stephan isn't helping with his clickbait video titles.

No, a 1031 exchange is not "$0 real estate." It's just tax-deferred. Still gotta pay for the real estate, and the taxes are still there for the future.
 

Raoul Duke

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Graham Stephan isn't helping with his clickbait video titles.

No, a 1031 exchange is not "$0 real estate." It's just tax-deferred. Still gotta pay for the real estate, and the taxes are still there for the future.

I know that. He explains in a way I couldn't.
 

SteveO

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Graham Stephan isn't helping with his clickbait video titles.

No, a 1031 exchange is not "$0 real estate." It's just tax-deferred. Still gotta pay for the real estate, and the taxes are still there for the future.
That is mostly true but... If you carry the property to your death and pass it along to your heirs, they will have a"step-up" in basis. Thus eliminating the tax.
 

thechosen1

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That is mostly true but... If you carry the property to your death and pass it along to your heirs, they will have a"step-up" in basis. Thus eliminating the tax.
That's true.

I think my (and others') biggest gripe with all of this government policy stuff is that they are using taxes to punish people and exact revenge. It's more about jealousy than it is about actual useful policies.

I know this is all borderline political stuff, but it deals directly with everyone in real estate.

(just my luck nobody in my family ever used the 1031 and right when I learn about it, Biden and his dumba$$ buddies want to ban it. Talk about pulling the ladder up behind you!)
 
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YanC

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That's true.

I think my (and others') biggest gripe with all of this government policy stuff is that they are using taxes to punish people and exact revenge. It's more about jealousy than it is about actual useful policies.

I know this is all borderline political stuff, but it deals directly with everyone in real estate.

(just my luck nobody in my family ever used the 1031 and right when I learn about it, Biden and his dumba$$ buddies want to ban it. Talk about pulling the ladder up behind you!)
Of course it is political. In France we have a lovely wealth tax, that is now only on real estate wealth. The state makes 2B a year on it. Total taxes are roughly 50% (probably more), of our 2300B GDP, or 1150B. So, this wealth tax that drives productive people away from the country accounts for... a mere 0,17%. But, it's been very useful to collect votes.
 

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I cant see it passing in its entirety.

We know that congress is corrupt, and we also know they're all rich and the vast majority through real estate.

They wont be so quick to impact themselves, theres other ways to increase taxes on the rich without impacting themselves directly.

I hope they don't do this as the 1031 exchange is one of the main tools for the less fortunate/rich to get into the rich/wealthy brackets through smart decision making.

I guess we'll see.
 

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Probably will just extend the holding time and make it harder to use by some other factor so they can say they taxed the rich and take the political win.
 

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thechosen1

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Probably will just extend the holding time and make it harder to use by some other factor so they can say they taxed the rich and take the political win.
and like usual, the already rich (those who already have billions in real estate) will be fine, while the new law will just prevent any newcomers from entering the arena.

Sorry Fastlane Forum new and growing real estate guys - no cake for you!
 

SteveO

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I've done a number of these exchanges. Sometimes they work great but other times not.

Every seller's favorite buyer is someone that is in an exchange. They have limited time to get into a deal and limited time to complete a transaction.

As the seller, you would likely be less inclined to negotiate price and/or renegotiate during the due diligence period because you know they are locked in.

If you think that you just won't tell the seller you are in an exchange, that won't work. There is a clause in the contract where the seller signs that they will cooperate with the buyer's 1031 exchange.

It's nice when you can sell when the market is reaching a high point. In an exchange, you are also purchasing the next deal at a high point.

As someone else pointed out, the 1031 is a tax deferment... not a tax break (unless carried through death). So you will likely be paying that tax later. I can tell you from the experience of doing 3 transactions with 2 exchanges in the middle, the tax will eventually be very painful.

I mainly cash out, pay the taxes, and wait for the right time for the next deal
 

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They need the extra taxes to build their 2 billion dollar anti-riot wall around Congress, so somebody has to pay. How else are they supposed to keep out the angry mobs of people they're stealing from?
 

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Gotta feel bad for mom and pop landlords with a small portfolio of 4 or 5 units that have held those for 20 years with the plan to cash out upon hitting retirement age.

They were smart and patient. Didn't blindly trust wall street and just inches away from the finish line the rules of the game are changed on them...

My guess is we'll see prices continue to rise as supply is already low, builders aren't building nearly enough, more millenials are hitting their 30's and starting families and now this... Investors who own properties won't sell because why would they want to engage in an optional tax for half of their gains. Yuck.

On top of it all, wall street is raising billions of dollars on sub 2% interest and buying up properties before they even hit the market.
 

WJK

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I see the "get Trump" form of journalism hasn't gone away.


Anyway, looks like the 1031 exchange is probably going to go "bye bye" ...

Still waiting for the announcement that sitting on the toilet will soon also be taxed.

View attachment 38254
I can't remember a time when we didn't have a 1031 exchange in the regs... The part that is scary to me to couple this with a big hike in long-term capital gains. Talking about pulling up the ladder behind them...
 

thechosen1

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Gotta feel bad for mom and pop landlords with a small portfolio of 4 or 5 units that have held those for 20 years with the plan to cash out upon hitting retirement age.

They were smart and patient. Didn't blindly trust wall street and just inches away from the finish line the rules of the game are changed on them...

My guess is we'll see prices continue to rise as supply is already low, builders aren't building nearly enough, more millenials are hitting their 30's and starting families and now this... Investors who own properties won't sell because why would they want to engage in an optional tax for half of their gains. Yuck.

On top of it all, wall street is raising billions of dollars on sub 2% interest and buying up properties before they even hit the market.
It’s corruption. I’m not here saying that the world is ending - there are still plenty of ways to make it as a businessman or entrepreneur.

But I will call a spade a spade and say this is all a steaming pile of you know what!
 

Kak

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Thinking about this critically… This effectively reduces the money circulating around in the commercial and multi-family real estate market by whatever the tax rate.

There is very little sidelined money among these real estate guys that I’ve noticed, they have their short exchange period and they get something else right after they sell something.

Supply and demand economics at play… With a destroyed demand, this is going to crash the RE market like crazy.

But no, “we’re not socialist.” One guy can really screw up the business model of 1m+ people in this country, nope, not one bit socialist.
 

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They need the extra taxes to build their 2 billion dollar anti-riot wall around Congress, so somebody has to pay. How else are they supposed to keep out the angry mobs of people they're stealing from?
Great Wall of USA ;D
 

thechosen1

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Great Wall of USA ;D
No, they stopped building that one to instead focus on the one that surrounds and protects all the politicians ;P

(I know what you meant but this was too funny)
 

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I like how these articles frame the ability to do business and provide value to the country as "costing the USA". This is why we will never win against these crooks. They have the power to manipulate whatever they want into being against "the common good" and get the idiot masses riled up.

Somehow providing necessary business and jobs and homes to people is bad, but literally stealing billions for the government to amass more power is good. Wtf, how did this happen and why has the majority accepted it???
 

thechosen1

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I like how these articles frame the ability to do business and provide value to the country as "costing the USA". This is why we will never win against these crooks. They have the power to manipulate whatever they want into being against "the common good" and get the idiot masses riled up.

Somehow providing necessary business and jobs and homes to people is bad, but literally stealing billions for the government to amass more power is good. Wtf, how did this happen and why has the majority accepted it???
Some people at the top must have decided to flip the table over and say "to hell with business, we are just going to do it all through force."

Sad...but there are still people who don't want it to be that way. Even millions of voters who don't want it to be that way.

Just gotta take some entrepreneurial action in the world to make a difference - even if that action is starting a small newsletter, political blog, a radio show (@Kak is doing it!), local paper, or running for office (yuck - but necessary).
 

WJK

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Somehow providing necessary business and jobs and homes to people is bad, but literally stealing billions for the government to amass more power is good. Wtf, how did this happen and why has the majority accepted it???
I don't think that the "majority" accepts it -- a vocal minority just makes the consequences of opposing them seem pretty dire. The idea of being rejected -- canceled -- is more than most people can bear. They are just going-along-to-get-along. They cave to the bullies. It takes moral courage and a stiff backbone to stand up and say that you don't agree. What's worse is that all of the cowards around you will chime in to try to silence you. They don't want anyone from their group to bring attention to them. So, by standing up, you become a target for the bullies and risk being rejected by your tribe. You must succeed, become the de-facto leader, or risk losing your social life and your reputation.

I'm not scared to stand up because I know that bullies are basically nothing. Their only power comes from them forming into scary-looking groups. But, those groups are only as strong as their weakest member, since they tend to quickly turn on one another. For all their screaming, bullies have no true convictions or moral compass. When confronted, they retreat into their victimhood status really fast. They dissolve into a pile of threatening screams and loud tears. They regularly act aggressively in order to cover up the fact that they are terrified of the world. Sometimes just locking your eyes on them is enough to stop them in their tracks. Even a well-thought-out question rocks their world. They suffer from feeling like they are frauds who will be exposed at any minute. Their veneer is very thin. Once one knows their vulnerability, they become much easier to defeat.
 

WJK

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Some people at the top must have decided to flip the table over and say "to hell with business, we are just going to do it all through force."

Sad...but there are still people who don't want it to be that way. Even millions of voters who don't want it to be that way.

Just gotta take some entrepreneurial action in the world to make a difference - even if that action is starting a small newsletter, political blog, a radio show (@Kak is doing it!), local paper, or running for office (yuck - but necessary).
They are trying to pull up the ladder...
 

thechosen1

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They are trying to pull up the ladder...
They've been doing it for a long time, these last couple blue administrations have just made the biggest push I've ever seen or read about, besides the 1930's-40's or so.

They want people to be dependent.
 

WJK

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They've been doing it for a long time, these last couple blue administrations have just made the biggest push I've ever seen or read about, besides the 1930's-40's or so.

They want people to be dependent.
They want the majority of people to be serfs and dependent on them. It makes them all-powerful...
 

Kak

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Some people at the top must have decided to flip the table over and say "to hell with business, we are just going to do it all through force."

Sad...but there are still people who don't want it to be that way. Even millions of voters who don't want it to be that way.

Just gotta take some entrepreneurial action in the world to make a difference - even if that action is starting a small newsletter, political blog, a radio show (@Kak is doing it!), local paper, or running for office (yuck - but necessary).
Force = Slavery. Even if it is less blatant.
 

JordanK

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Pivot and move on. There's always different angles of approach and ways around these things.
 

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