Senator Lee Introduces 1031 Exchange Improvement Act

Statement

Sen. Mike Lee (R-UT) introduced the 1031 Exchange Improvement Act which would eliminate the current 45-day requirement to identify 1031 exchange properties. 1031 exchanges allow taxpayers to roll earnings from real estate sales into near-term future investment properties while deferring the capital gain tax burden until the eventual sale of the ultimate property. The Internal Revenue Service had extended the 45-day period to 120 days during the COVID-19 pandemic.

The bill has received wide support from tax reform and taxpayer advocacy groups.

Of the bill, Sen. Lee said, "The 1031 Exchange Improvement Act will allow American investors to acquire new properties in a tight real estate market without the ticking time bomb of the IRS looming over their shoulders. This bill will allow Americans flexibility to make the best decisions while still protecting federal revenue."

Pete Sepp, President of the National Taxpayers Union said of the bill, "NTU supports a variety of policies that would simplify tax administration for taxpayers as well as the IRS, and real estate and investment transactions are a particularly complex area of law. Sen. Lee's 1031 Exchange Improvement Act would simplify like-kind exchanges for investors, making this provision of the code work more smoothly for everyone involved. We applaud Sen. Lee for introducing this commonsense proposal."

Grover Norquist, President of Americans for Tax Reform said, "I urge you to support and co-sponsor the "1031 Exchange Improvement Act," legislation introduced by Senator Mike Lee (R-Utah.) to simplify Section 1031 "like-kind exchanges." Specifically, this legislation would repeal the requirement that a taxpayer utilizing a 1031 exchange must identify a second property within 45 days. All Senators should support this legislation. … The 45-day period to identify 1031 exchange properties imposes a strict deadline on property buyers, forcing them to make rushed decisions. Repealing this deadline, while retaining the 180-day deadline will help streamline 1031 compliance so that the provision can continue to be used by taxpayers to invest and grow the economy."


Senator Lee is joined in this effort by Sen. Mike Braun (IN), Sen. Ted Cruz (TX), and Sen. Roger Marshall (KS) as cosponsors.

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