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Concerning 1031 Exchanges: What Should Owners Expect in 2022?
Updated: Feb 13, 2025
As 2022 begins, 1031 exchanges remain intact, and the commercial real estate market continues to thrive. Mike Packman discusses what property owners can expect, following the exclusion of the 1031 exchange limitation from President Biden’s “Build Back Better” agenda.
Stay informed on the latest trends and tax policies affecting real estate investment strategies. Read the full article by Mike Packman in the New York Real Estate Journal.
1031 Exchanges and the Economic Outlook
Tax Deferral Benefits: Section 1031 allows investors to defer capital gains taxes by reinvesting the sale proceeds into similar investment properties within a set time.
Securitized Programs: In 2021, securitized 1031 exchange programs raised over $7 billion, marking a 50% increase from 2020.
Tax Loophole Misconception: Although some view 1031 exchanges as a loophole for the wealthy, they are a valuable tool for all investors, with a median sales price of $500,000.
2022 Market Dynamics
No Immediate Changes: With no budget approved for 2022 and President Biden’s State of the Union address kicking off the budget discussion, 1031 exchanges are unlikely to face major scrutiny in the near term.
Economic Impact: 1031 exchanges have long supported economic growth, and 88% of exchanges ultimately result in taxable sales, reinforcing their role in the economy.
Looking Ahead
As we move through 2022, property owners can expect continued use of 1031 exchanges as a powerful investment strategy. With less scrutiny on the horizon, the commercial real estate industry remains optimistic.
02/21/2022
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