The 1031 Exchange

September 28, 2021

Recently Caton Commercial Real Estate Group founder and CEO Bill Caton had the opportunity to address the importance of protecting the 1031 like kind exchange with the Naperville Area Chamber of Commerce.

What is a 1031 exchange? Under Section 1031 of the United States Internal Revenue Code a taxpayer may defer capital gains tax when the proceeds from the sale of one investment property are used to purchase another investment property. While opponents view this reinvestment benefit as a loophole, Bill points out that 80% of taxpayers do only one 1031 exchange, then dispose of the property in a taxable sale generating significant tax revenue for federal, county and city governments.

It is estimated that 30-35 people are involved in a commercial real estate transaction from attorneys, bankers, title companies, engineers, environmental groups and of course commercial real estate brokers. Ernst & Young estimated that the reinvestment through 1031 exchanges for 2021 will generate:

• More than 560,000 new jobs
• More than $27.5 billion in labor income
• $14 billion in Federal, State, and Local taxes, all of which adds
• $55 billion to Gross Domestic Product

Bill states, “The best way to attract private capital needed to improve and strengthen our communities and infrastructure is to keep Section 1031 unchanged.”

Watch the full video here:

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