Property investors rode a wild wave during the pandemic, with the short-term rental market stopping, then restarting, and property prices in many second home markets soaring. What does the future hold for new second-home owners and for managers of more robust property portfolios? We’ll explore that and more, all May long, at Inman.

As you might know, 1031 “like-kind” exchanges is on the chopping block again. So, considering President Biden’s proposal to eliminate 1031 exchanges for investors with annual incomes of $400,000 or more, last week, we reached out to our readers and asked what advice you’re giving to your clients.

Should investors continue with business as usual? Is 2021 the year to exchange? From recommending them to sell to urging them to speak with an accountant, here’s what you’re telling investors who’re wary of that bit of tax code change.

  • I completed four 1031-exchange transactions. Most of my clients do not make $400,000, so it shouldn’t affect them.
  • If you plan on exchanging in the next few years, 2021 is the year to exchange. You should also call your U.S. Senators and representatives to say this is a bad idea.
  • I am advising my clients to still invest in 1031 properties.
  • To avoid prying into their finances, I tell all my buyers considering using the 1031 exchange to see their accountant or wealth manager. I also suggest a 1031 exchange professional locally for them to call. I remind my buyers that I have my license in real estate and not in mortgages/investments/financial planning.
  • The O’Biden proposed changes to 1031 are disturbing. More tax and spend policy by members of his cabinet and advisers.
  • Money will move to adapt to the new $400,000 limit. A 20-unit building can have 20 separate PID numbers for 20 different transactions. SFR investing will increase. More lot splits and fractional transactions. 
  • For mom-and-pop investors, the $400,000 annual income will only come into play if they don’t have a great team consisting of an excellent CPA, real estate attorney and Realtor. Still, I’m advising them to consider selling now if they think a change will impact them.
  • Real estate folks have a current workaround at their fingertips — by selling and in the same year, buying another property and using the bonus depreciation (from a cost segregation study) in order to offset the capital gains on the sale. Keep in mind: Bonus depreciation begins to phase out in 2023 and is totally expired in 2027, so this would only be a short-term alternative solution.

What did we miss? Please share your thoughts in the comments section below.

agent advice
Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Inman Connect is LIVE today! Join us and thousands of your peers from wherever you are.Register Now×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription