Real estate investors shouldn't necessarily hold their breath, but they should watch carefully to see how the new administration in Washington handles the popular tax deferral program known as the 1031 exchange.
Named after a section in the tax code, a 1031 exchange allows real estate investors to defer the tax on capital gains for real estate investments when they swap on asset for a "like kind" investment. That means, for example, selling a two-flat and buying a six-flat, or even purchasing a commercial property.
In such an exchange, the seller/buyer can realize the gains from a sale and roll it over into a purchase without paying taxes that would otherwise be due. It's an important program for many investors large and small and could mean a major change in real estate investing if Congress eliminates the exemption.
Read more on this issue at the Chicago Tribune here.