Elizabeth Whitman (Whitman Legal Solutions, LLC): American Families Plan and Real Estate Investments – 1031 Exchanges (June 1, 2021)

Elizabeth Whitman, of Whitman Legal Solutions, LLC, has made available for download her article, “American Families Plan and Real Estate Investments – 1031 Exchanges,” published in JDSUPRA. The abstract is as follows:

Although I was primarily a violinist, I also played the clarinet. When most people think of the clarinet, they think of the “standard” b-flat clarinet. But there actually are seven or eight different types of clarinets covering a wide pitch range.

Clarinets are transposing instruments, which means when the musician plays a C on that instrument, a different note sounds. The “common” clarinet is a B-flat soprano clarinet, which sounds a B-flat when the musician plays what is notated as a C…

Until now, like clarinetists who can switch between instruments without learning new fingerings, real estate investors have been able to use Section 1031 exchanges to switch between real estate investments and defer tax liability. However, if President Biden’s American Families Plan is adopted as proposed, like a clarinetist, real estate investors may find their ability to switch between investments is more like switching from B-flat to E-flat clarinet. Under the American Families Plan, if a real estate like-kind exchange isn’t carefully structured, investors may pay taxes on the switch.

Click here to view Elizabeth Whitman’s summary of “American Families Plan and Real Estate Investments – 1031 Exchanges.”

Posted by Bella Hoang, Managing Associate Editor, Wealth Strategies Journal.

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