Like-Kind Exchanges

The Issue

Since 1924, Congress has recognized that gain should not be taxed when property held for trade or business use or for investment is exchanged for "like-kind" property (property that is similar in value). This important principle, included in Section 1031 of the Internal Revenue Code, recognizes that taxpayers exchanging like-kind property have not altered either the type or level of their investment and that the economic situation of the taxpayer has not changed. For real estate, like-kind exchanges often provide the necessary liquidity to make deals work and have become essential to the operation of real estate markets. Without like-kind exchanges, many transactions simply would not occur.

Position

NAIOP adamantly opposes proposals to alter the use of like-kind exchanges. Restricting the use of like-kind exchanges would threaten the liquidity of real estate markets and would severely curtail transactions and the efficiency of the market. It would also remove the incentive to own and repair distressed properties.

Talking Points

• Altering current like-kind exchange policies would threaten the liquidity and efficiency of real estate markets.
• Altering current like-kind exchange policies would remove the incentive to own and repair distressed properties.

Contact:
Aquiles F. Suarez
Vice President for Government Affairs
(703) 904-7100 ext. 115