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Real estate investors We’ve long known about the power of a 1031 exchange. It’s one of the most reliable ways to build wealth and defer taxes along the way. Named after IRC Section 1031, this piece of tax legislation allows real estate investors to defer taxes on capital gains from the sale of a property and transfer them toward the purchase of a new investment property. To take advantage of this valuable option, investors must find and purchase a similar property within 180 days of the original sale. So, technically, the profits are not realized, but simply exchanged for the new property.
Serial investors have been known to do this repeatedly in properties, whether by purchasing their own properties directly or working with a platform that facilitates 1031 exchanges. There is no limit to how often an investor can use a 1031 Exchange. A presidential candidate is suggesting a new way to do a 1031 exchange that could drastically change the process.
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A new path for 1031?
Speaking at the Bitcoin 2024 conference in Nashville, TN, presidential candidate Robert F. Kennedy Jr. announced several Bitcoin-related executive orders that would take effect if he is elected. Kennedy said one of his first executive actions would be to transfer approximately 200,000 Bitcoins held by the US government to the US Treasury as a strategic asset. He also said he would ask the Treasury Department to purchase 550 Bitcoins daily to build a reserve of four million Bitcoins that matches the percentage of global gold reserves held by the US. Bitcoin would make these reserves eventually worth hundreds of billions of dollars.
He would also issue an executive order to instruct the IRS to make transactions between Bitcoin and the US dollar non-reportable. This would mean that Bitcoin purchases would essentially be non-taxable. By signing an executive order to treat Bitcoin as an eligible asset for a 1031 exchange, he would allow real estate investors to turn real estate into digital currency without tax consequences.
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President Trump also said he would create a national Bitcoin stockpile. He said: “If crypto is going to define the future, I want it to be mined, minted and manufactured in the USA.” He also said he would fire Securities and Exchange Commission Chairman Gary Gensler and appoint a crypto consultant to create new regulations. guidance. He compared crypto to the steel industry, saying it is still in its infancy.
Trump also addressed the issue of Bitcoin’s high energy usage. He said he would free people from regulations regarding the use of electricity for Bitcoin mining and that new power plants would be built. He suggested this would be done using fossil fuels and nuclear energy, but in an environmentally friendly way. He said this is necessary for the energy demands of Bitcoin and artificial intelligence.
The Biden administration has proposed limits on the 1031 exchange program, capping the deferral at $500,000 per taxpayer each year. This type of proposal has been raised before and has always been rejected. The 1031 exchange continues to be a valuable tool for real estate investors and seems unlikely to disappear completely. Whether or not this will become a way to migrate to Bitcoin is another question.
Seeking real estate wealth without a 1031 exchange?
You don’t need to directly own investment properties to profit from real estate. The current high interest rate environment has created an incredible opportunity for investors to earn income without becoming a homeowner. Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider.
For example, the investment platform backed by Jeff Bezos just launched its Private Credit Fund, which provides access to a pool of short-term loans secured by residential real estate with a target net annual yield of 7% to 9% paid monthly to investors. The best part? Unlike other private credit funds, This one has a minimum investment of just $100.
Don’t miss this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga’s favorite high-yield deals.
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This article Could Bitcoin be the future of 1031 exchanges? originally appeared in Benzinga.com
