1031 Exchange – (Tax Deferral)

Part 3 of, "6 Tax Breaks Landlords Get that Hurt the Economy and You"

When landlords sell their rental houses they’re supposed to finally pay the taxes they didn’t pay for all those years because they took the tax deduction on (pretend) depreciation.

But landlords don’t even have to pay those back taxes when they sell a rental house, if landlords just – get this – buy another rental house at the same time they sell one! What a crazy, huge tax break for landlords!

This tax break called a 1031 Exchange and it essentially pays landlords money if they’ll just buy another house at the same time they sell one. It greatly increases the demand for houses from landlords anytime they sell one which, of course, increases house prices for everyone.

The live-in owners next door can’t put off paying their taxes forever like that. 

Is that fair?

Next

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All

Part 1 – 6 Tax Breaks Landlords Get that Hurt the Economy and You

Part 2 – Depreciation Tax Deduction – (Tax Deferral)

Part 3 – 1031 Exchange – (Tax Deferral)

Part 4 – Mortgage Interest Tax Deduction – (Tax Reduction)

Part 5 – Tax-Free Landlord Profit – (Tax Deferral)

Part 6 – Taxes on Capital Gains are a Lot Lower Than Taxes on Ordinary Income – (Tax Reduction)

Part 7 – Stepped-Up Tax Basis – (Tax Reduction)

Part 8 – 6 Distortions of the Housing Market

Part 9 – 2 Sets of Rules for Single-Family Houses

Part 10 – Fixed Supply of Single-Family Houses

Part 11 - Houses for Homes, Not Tax Shelters

Part 12 - Solutions

Part 13 - Permanently Increase Economic Growth

Part 14 - Life is Crazy Enough

Part 15 - The Hardest Part

Part 16 - Distorted Back to Reality

Part 17 - Stop Distorting the Housing Market

Part 18 - Conclusion