May 20, 2022 |
Updated May 20, 2022
Like-kind exchanges play a critical role in supporting multifamily housing and contributing to the U.S economy, and this primer provides a look at top-line findings of a soon-to-be-released NAA- and NMHC-sponsored study.
Like-kind exchanges are a significant contributor to U.S. economic activity. In fact, businesses that use like-kind exchanges in 2021 supported 447,000 jobs while generating $19.4 billion in labor income. Moreover, suppliers to entities using like-kind exchanges supported 529,000 jobs and $58.1 billion in labor income. On a combined basis, like-kind exchanges supported 976,000 jobs, $48.6 billion in labor income and generated $97.4 billion in value added to the U.S. economy.
Like-kind exchange rules play a crucial role in supporting the multifamily sector by encouraging investors to remain invested in real estate while still allowing them to balance their investments to shift resources to more productive properties, change geographic location or diversify or consolidate holdings. As long as a taxpayer remains invested in real estate, tax on any gain is deferred. When the taxpayer ultimately does sell the asset, the property tax is paid.
This primer provides top of the line findings from the soon-to-be released NAA- and NMHC-sponsored EY study, Economic Contribution of IRC Section 1031 Like-Kind Exchanges to the US Economy.