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 CAA Fights Legislation to Eliminate 1031 Exchanges |
Assembly Bill 2640, authored by Juan Arambula (D-Fresno) would eliminate a company's ability to use 1031 like-kind exchanges (LKEs). LKEs allow companies and rental property owners to sell an asset and defer realization of any gain (and, therefore, the associated tax) when the proceeds of the sale are used to purchase an asset of similar type. In order for the transaction to qualify as a LKE, the assets must be structured as an exchange and the exchanged assets (properties) must be of a similar classification and must be used in a trade or business.
LKEs have been a part of the tax code since 1921 and the provisions have been strengthened and expanded on multiple occasions. They exist to promote healthy business activity and are especially powerful tools for small and medium-sized companies and/or property owners. One of the primary reasons that 1031 exchanges have been so unanimously agreed upon is that they're constructed to promote reinvestment. Eliminating LKEs will restrict useful business tools for property owners and companies.
CAA is opposing AB 2640 and is actively working with the legislator to amend the bill to eliminate language regarding the 1031 exchange. |
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California Apartment Association
980 Ninth Street, Suite 200 | Sacramento, CA 95814
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