The Biden Administration released its 2024 budget plan this week that proposes sweeping tax increases on investors and the nation’s highest earners. Once again, among the proposals is the requested elimination of like-kind exchanges that allow for deferral for capital gains taxes under Internal Revenue Code Section 1031.
Yesterday, the Treasury Department released the 2024 fiscal year budget of the U.S. government, which accompanied Biden’s proposed tax proposals.
As The DI Wire reported in March 2022, Biden’s proposal previously sought to limit the deferral of gain on Section 1031 exchanges to $500,000 for each taxpayer annually, or $1 million for a married couple filing jointly, similar to the tax proposals Biden proposed in the first year of his presidency.
However, in Biden’s annual budget request to Congress for 2024, he requested a complete “repeal [of] deferral of gain from like-kind exchanges.”
The White House estimates the tax proposals, which it labels a “deficit-reduction plan,” would results in $3 trillion of federal savings as a result of “closing other tax loopholes that overwhelmingly benefit the rich and the largest, most profitable corporations.”
“This includes closing the so-called ‘like-kind exchange loophole’ that lets real estate investors defer tax indefinitely, reforms to tax preferred retirement incentives to ensure that the ultrawealthy cannot use these incentives to amass tax free fortunes, and closing a loophole that benefits wealthy crypto investors,” according to the White House budget plan.
The annual budget proposal outlines the president’s tax and spending priorities, and any change to the tax code would require the passage of legislation through Congress.
Despite three consecutive proposals by the Biden Administration to eliminate or limit 1031 exchanges, Congress has previously failed to act upon the requests.
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