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Accruit Boasts Third-Generation 1031 Exchange Professional

05/29/24

Jillian Rosansky, Senior Account Executive, is a third generation 1031 Exchange professional. Following in her father’s and grandfather's footsteps, Jillian ...

Authored by: meredithb@accruit.com

Authored on: Wed, 05/29/2024 - 16:09

Company and Industry News

Jillian Rosansky started at Accruit in June 2023 as a Sales Executive. In less than a year, she was promoted to Senior Account Executive. Jillian engages inbound queries, builds brand awareness through individual and company outreach, and leads many educational presentations, such as Accruit’s monthly webinar, which is coming up on <a href="https://events.teams.microsoft.com/event/30455b35-fb5a-460e-af87-29c2ab…; rel="noreferrer noopener" target="_blank">June 18th</a>. Jillian’s expertise and background are impressive, which can be explained by the fact that she is the third generation of 1031 Exchange professionals in her family. Both Jillian’s father and grandfather have worked in the 1031 Exchange industry for decades, and she is carrying on the family legacy in her own career.

To garner some insight into Jillian’s path to working in the 1031 Exchange industry and her family ties, she was interviewed by Accruit to garner more insight into her background, family, and experience working in 1031.

<h2 aria-level="2" paraeid="{713f00e4-dee3-4803-81ca-8732c07a3f3e}{239}" paraid="1892944955" role="heading">1031 Exchange Bloodlines </h2>

Jillian’s father and grandfather both worked in the 1031 Exchange industry.  Her father runs his own 1031 Exchange company out of California and has been in business for over 25 years. Prior, both her father and grandfather worked together at a different QI for many years. Her grandfather has since retired. Jillian recalls growing up hearing about their work with 1031 exchanges, but at the time didn’t imagine she too would work in the industry. Jillian’s father was kind enough to provide us a quote on his daughter, “I am very proud of Jillian. She is tremendously passionate with everything she does, and I am confident she will be extremely successful. She is wonderful at developing relationships and is a true professional.”

<h2 paraeid="{5d380cd8-5512-4409-a3ed-02102f860093}{10}" paraid="2093550385">The Unlikely 1031 Exchange Specialist  </h2>

One might assume that Jillian had plans to become a 1031 Exchange specialist from childhood given her family roots in the industry, on the contrary Jillian didn’t always have intentions to follow in her father’s footsteps.

Jillian grew up in Orange County, CA and went to the University of Arizona where she graduated with a bachelor’s degree in business marketing. After college, she worked in various sales roles, and she began her career. It was more happen stance than anything that led Jillian to Accruit and into 1031 exchanges.

After some time as an Account Executive in the HR and Payroll Software sector, Jillian was ready to take the next step in her career. Jillian had a mutual connection with one of Accruit’s banking partners, who connected her with Accruit’s CEO, Brent Abrahm. At the time, Accruit was growing their Business Development team, and looking to hire a Sales Executive. Jillian and Brent connected, they discussed her interest in the real estate industry, her background in sales and business development, as well as her knowledge around 1031 exchanges given her family’s legacy in the space.  With Jillian’s acceptance of the Sales Executive role at Accruit, a third generation 1031 exchange professional was created.

<h2 aria-level="2" paraeid="{5d380cd8-5512-4409-a3ed-02102f860093}{60}" paraid="1609036230" role="heading">1031s Run in the Family  </h2>

Now that Jillian has joined her father & grandfather in the 1031 exchange industry, she has a new perspective on all those years at the dinner table hearing about tax deferral.  She stated, “It has been such an incredible opportunity working at Accruit and getting to grow the local, Denver market.”

When asked what her favorite aspects of working in the 1031 Exchange industry are Jillian stated, “Being able to act as a resource for investors and their representatives to reduce their tax burden and help them meet their estate planning goals. I also really enjoy providing CE education to local real estate professionals and hosting local events for investors.”

Jillian has enjoyed growing her career and expanding her own footprint in the 1031 exchange industry. Jillian credits her family as big supporters of her success and they have enjoyed watching her follow in the footsteps of her father and grandfather. While she would be an asset to any Qualified Intermediary, including her father, Jillian is committed to continuing to grow her and Accruit’s presence in Colorado.

Now that Jillian is immersed in the 1031 exchange industry, she has no plans to leave. In the coming years she looks forward to continuing to educate not only Denver, CO, but also greater Rocky Mountain region of real estate professionals and property owners on the benefits of utilizing 1031 Exchanges.

Accruit has been honored to be perhaps the first 1031 exchange Qualified Intermediary with a third generation 1031 exchange specialist. As a Senior Account Executive, Jillian Rosansky has made an immense impact on the both the education Accruit provides to colleagues in the real estate industry, as well as being a key factor in driving business and building connections within Accruit’s home market of Denver, CO. We look forward to seeing more of what Jillian will accomplish in her role, and our company will continue to foster this family legacy built on 1031s.

The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.

Wed, 05/29/2024 - 21:54

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Accruit Named Finalist in Illinois Real Estate Journals' CRE Awards

04/30/24

Accruit, national leading 1031 Exchange Qualified Intermediary, has been named a finalist, one of three, in the Professional Service Company category ...

Authored by: marketing

Authored on: Tue, 04/30/2024 - 15:14

Company and Industry News

<h2>Accruit has been named a finalist in the Professional Service Company category. </h2>

REjournals has announced the finalists for their 2024 Commercial Real Estate Awards. The REJournals CRE Awards celebrate the achievements, successes and highlights from all sectors of the commercial real estate industry.

Accruit, a national 1031 Exchange Qualified Intermediary and Exchange Accommodate Titleholder, boasts a considerable foothold in the greater Chicago, Illinois market with an office and two staff attorneys located in Chicago, Illinois.

In 2023, Accruit supported over $15+ Billion in real estate transactions through our patented 1031 Exchange software, Exchange Manager Pro℠. Accruit alone as a Qualified Intermediary and Exchange Accommodation Titleholder facilitated $4.12 Billion in real estate transactions.

Specific to Illinois, Accruit facilitated over $218 million in Relinquished Property transactions and over $122 million in Replacement Property transactions, totaling a combined $340+ million of RE closings in Illinois in 2023.

In addition, Accruit presented two real estate continuing education courses for Illinois brokers and agents, as well as two continuing legal education courses to through collaborations with Advocus, formerly ATGF, and Illinois Real Estate Lawyers Association (IRELA). Accruit has participated as panelist speaker for four consecutive years, including 2023, at the RE Journals National Net Lease Summit in Chicago, IL.

Accruit is active in providing 1031 Exchange education and resources to many Illinois associations including NICAR, IRELA, and Advocus.

Lastly, in 2023, Accruit's specialized services, as an Exchange Accommodation Titleholder, was part of the largest sale of a multi-tenant suburban office building in the past 18 months in Illinois, the <a href="https://rejournals.com/oakbrook-terrace-tower-purchased-for-60-million/…; title="Oakbrook Terrace Record Real Estate Transaction">Oakbrook Terrace transaction</a>. Accruit acquired Oakbrook Terrace as part of a Reverse Exchange.

Accruit is honored to be a finalist and looks forward to the awards ceremony June 5th, 2024.

More information about the <a href="https://xqwri.mjt.lu/nl3/-e51r4rViMaDSZA9Bn9WOg?m=AWsAAEENjegAAAAZGRQAA…; title="Illinois RE Journal CRE Awards Finalists">Illinois CRE Awards</a> and full list of finalists.

Tue, 04/30/2024 - 16:59

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1031 Exchange: Solution for Short-term Rental Property Owners Faced with Legislative Changes

04/09/24

This blog article covers short-term rentals, specifically the rise of Airbnb and VRBO, and how recent and proposed legislative changes ...

Authored by: meredithb@accruit.com

Authored on: Tue, 04/09/2024 - 19:03

Company and Industry News

<h2 aria-level="1" paraeid="{43096cfa-bd9e-49c3-9dbe-ba9b52a5a2ec}{14}" paraid="1747909047" role="heading">Short-term Rental Market Overview </h2>

Over the past 15 years, short-term rentals, such as Airbnb and VRBO, have become an increasingly popular investments for property owners. In 2020, the COVID-19 pandemic led to an explosive need for short-term rentals, which led many investors to turn their sights and funds toward short-term rentals. As of 2024, Airbnb has over four million hosts, or property owners, and seven million global listings, as many hosts own more than one rental property. In recent years, the short-term rental market has exploded. The average number of short-term rentals in the US in 2022 was 1,278,254, a 20.5% increase from 2021 and 2023 saw an additional 11% increase up to 1,424,441 total rentals. In 2022, the average monthly rental income from Airbnb in Denver was $3,540, for a combined annual rental income of $42,480.

It was reported in 2023 that 30% of vacation property owners and 32% of investment property owners have expressed interest in renting their homes as short-term rentals. While interest and inventory for short-term rentals has drastically increased over recent years, residents of high-interest areas are voicing concerns over the impact they feel short-term rentals may have on their neighborhoods. As a result, many cities and counties have begun to institute restrictions and even bans in specific high-tourism and urban areas which affect the return-on-investment potential for short-term rental property owners.

<h2 aria-level="2" paraeid="{43096cfa-bd9e-49c3-9dbe-ba9b52a5a2ec}{192}" paraid="1066438142" role="heading">Proposed Limits to Short-Term Rentals in Colorado </h2>

<h3 aria-level="3" paraeid="{43096cfa-bd9e-49c3-9dbe-ba9b52a5a2ec}{202}" paraid="1397955090" role="heading">County Specific </h3>

Increased restrictions and bans on short-term rentals can be seen across the country, but below are some specific examples of proposed legislation that would impact Colorado short-term rental property owners.

Park County, Colorado, which includes popular towns such as Alma and Fairplay, has experienced an increase in short-term rentals. In 2021, the county passed an ordinance that property owners must obtain an annual license. Additionally, the tourist-filled ski region is considering limiting or eliminating short-term rental properties as issues of housing scarcity, increased pricing, and neighborhood disturbance have been called into question. While Park County faces decisions regarding this industry, many towns and counties across Colorado, as well as other parts of the country, are also weighing the decision between allowing a strong rental market to continue or impose hard limits.

Another Colorado county dealing with proposed regulations is Summit County, home to many iconic and popular ski towns such as Breckenridge, Frisco, and Keystone. In terms of Summit County’s property tax rates, it was proposed earlier this year to increase tax rates based on classifications between lodging and residential properties. If short-term rental properties are classified as lodging properties, due to being booked as a short-term rental for more than 90 days per year, then the tax would be four times the residential rate. This large discrepancy would make it difficult for these property owners to cover their operating expenses or receive any meaningful return on investment, hence reducing property being used in this way.

<h3 aria-level="3" paraeid="{397345d8-4c11-4a4b-b7d9-4ed1a070c7ff}{45}" paraid="9735791" role="heading"> 
Colorado Senate Bills 33 & 2: </h3>

In Colorado, two proposed bills are set to address and revise guidelines regarding short-term rental properties. <a href="https://leg.colorado.gov/bills/sb24-033" rel="noreferrer noopener" target="_blank">Senate Bill 33</a> proposes that property, as well as the land it is on, can either be categorized as residential real property or lodging property. If the unit was leased for short-term stays over 90 days in the previous tax year, then it would be classified as lodging property. Otherwise, it would be residential real property. From this assessment, property taxes could be determined, highlighting large discrepancies between the classifications with lodging properties facing a much higher tax rate.

<a href="https://leg.colorado.gov/bills/sb24-002" rel="noreferrer noopener" target="_blank">Senate Bill 2</a> proposes amendments to current law, allowing counties to offer property tax credits or rebates to promote specific uses of real property addressing local concerns to the use of real property. These concerns may include issues affecting residents' health, safety, welfare, equity, housing access, and education. The bill would allow counties and cities to give tax breaks to properties that are used for mental health, childcare, and other areas of “specific local concern.” The bill defines an "area of specific local concern" as real property use that is diminishing or unavailable or deemed necessary for residents' well-being.

While these bills are in review, the property owners of <a href="https://kdvr.com/news/politics/colorado-politics-news/short-term-rental…; title="Proposed Short-term Rental Rental Tax Opposition">short-term rentals are pushing back</a> on what feels like an inaccurate characterization. Al Furlone is the manager of Winter Park Lodging Company and Steamboat Lodging Company, and a founding member of the Colorado Lodging and Resort Alliance. He claims to have conducted a survey of thousands of Colorado vacation rental homeowners and found that 89% of them only own one property. This survey conflicts with a popularized narrative that many of the short-term rental properties are controlled and managed by a few large corporations. Furlone wants policymakers to understand that this bill will be targeting and effecting individual property owners, not large business conglomerates attempting to utilize a lower tax rate by claiming vacation homes and hotels as residences.

<h2 aria-level="2" paraeid="{397345d8-4c11-4a4b-b7d9-4ed1a070c7ff}{173}" paraid="1294118417" role="heading">Trends Between City Bans & Restrictions </h2>

The three most common policies affecting short-term rental regulations are registration and licensing requirements, occupancy limits, and taxation.

<h3 aria-level="3" paraeid="{397345d8-4c11-4a4b-b7d9-4ed1a070c7ff}{211}" paraid="1723793303" role="heading">Registration & Licenses </h3>

For many cities and counties, registering properties as short-term rentals and obtaining appropriate permits and licenses are required. In this process, fees may be applicable, and rentals must meet criteria such as safety inspections or proof of insurance.

Also, cities are instituting caps on short-term rentals through neighborhood-specific licenses. For example, the Mission Beach neighborhood in San Diego, California, has imposed regulations that no more than 30% of the available housing units can be short-term rentals. These limits are imposed and monitored by requiring residents to apply for a license to operate in the short-term rental market. Once the 20% limit has been reached, no additional short-term rental properties would be permitted.

<h3 aria-level="3" paraeid="{bc72e985-5a3e-42cd-a6e9-631944737f93}{1}" paraid="1079808568" role="heading">Occupancy Limits </h3>

Another common policy is occupancy limits. Some cities like Austin, Texas and Honolulu, Hawaii only allow a small number of guests, no large groups (typically a 6–10-person limit). This is often done to address concerns about noise, parking, and neighborhood disruption.

<h2 aria-level="3" paraeid="{bc72e985-5a3e-42cd-a6e9-631944737f93}{36}" paraid="1803896534" role="heading">Taxation </h2>

Lastly, taxation is implemented across the board for rental properties. Short-term rental owners are often subjected to various taxes, including sales, occupancy, local tourism, and property taxes. Proposed legislation is focused on increasing tax rates for short-term rentals to make them a less desirable investment, as well as potentially increasing reporting requirements or collection mechanisms for these taxes.

Overall, new legislation and regulations affecting short-term rental properties aim to balance the interests of property owners, residents, and local communities. While these regulations may impose additional requirements and costs on property owners, they are intended to address concerns related to housing affordability, neighborhood quality of life, and the overall impact of short-term rentals on local housing markets.

These are just a few examples of proposed legislative changes that will impact short-term rentals. It is important to note that regulations can vary significantly from one town or state to another. It's essential for hosts and travelers to research and comply with the specific regulations in their area to avoid potential legal issues. Additionally, the landscape of short-term rental regulations is continually evolving, so it's essential to stay informed about any updates or changes in local laws.

<h2 aria-level="2" paraeid="{bc72e985-5a3e-42cd-a6e9-631944737f93}{146}" paraid="1850278828" role="heading">Utilizing a 1031 Exchange to Exit Short-term Rentals and 1031 Exchanges </h2>

With looming regulations on short-term rentals, many property owners and investors may be looking for an exit. A 1031 Exchange would allow property owners to exit properties they are no longer able to use as intended, prior to new or pending legislation, while deferring tax on the real estate transaction. These property owners can redeploy the proceeds from the sale of the property into a different property type or one unaffected by short-term rental regulations.

According to the Internal Revenue Code (IRC) §1031, real estate assets that are held for productive use in a trade or business, or for investment are eligible for a 1031 Exchange. By that definition, short-term rentals meet the qualifications for a 1031 Exchange. With that, a safe harbor definition has been created by the Internal Revenue Service (IRS). If a property is used as a personal vacation or second home as well as a short-term rental for any amount of time during the year, the following safe harbors must be met in order to qualify for a 1031 Exchange:

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The owner has held the property for at least two years immediately preceding the 1031 Exchange.  
</li>
<li aria-setsize="-1" data-aria-level="1" data-aria-posinset="2" data-font="Symbol" data-leveltext="" data-list-defn-props="{"335552541":1,"335559682":1,"335559685":720,"335559991":360,"469769226":"Symbol","469769242":[8226],"469777803":"left","469777804":"","469777815":"multilevel"}" data-listid="1" role="listitem">
During that period, the taxpayer rents the property to others at a fair market price for at least 14 days each year.  
</li>
<li aria-setsize="-1" data-aria-level="1" data-aria-posinset="3" data-font="Symbol" data-leveltext="" data-list-defn-props="{"335552541":1,"335559682":1,"335559685":720,"335559991":360,"469769226":"Symbol","469769242":[8226],"469777803":"left","469777804":"","469777815":"multilevel"}" data-listid="1" role="listitem">
The taxpayer’s personal use of the property during that time is less than 14 days or 10% of the total days the property is rented to someone, which quantity is greater.   
</li>
</ul>

Transitioning from a short-term rental to a different kind of investment property through a 1031 Exchange offers investors an avenue to optimize their real estate portfolio and achieve a greater return on investment than new regulations are allowing. By utilizing an exchange, investors can shift from what can become a low-income producing property to something that will yield higher returns, whether that be a single-family rental home, oil & gas, office building, Delaware Statutory Trust (DST), or one of the many other qualifying Replacement Properties. A 1031 Exchange not only provides tax benefits but also allows investors to diversify their rental portfolios and potentially enhance long-term financial stability.

In conclusion, while the short-term rental market has experienced significant growth, increased regulations and proposed legislation raise challenges for property owners. With ongoing discussions in places like Park County, Colorado, and legislative efforts across the country, property owners are encouraged to explore a 1031 Exchange as an opportunity to defer tax while transitioning into a different real estate investment that can accomplish their current and future investment goals.

The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.

Wed, 04/10/2024 - 14:22

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IRS Announces Tax Relief for Areas in Rhode Island and Maine due to Recent Severe Storms

04/05/24

The IRS has announced tax relief for multiple counties in Maine and Rhode Island that were previously impacted by severe ...

Authored by: meredithb@accruit.com

Authored on: Fri, 04/05/2024 - 14:43

Company and Industry News

<h2>Due to the severe storms and flooding of December 17th and January 9th, the IRS has issued tax relief for parts of Maine and Rhode Island. </h2>

The General postponement date is July 15th, 2024.

In Maine, individuals that reside or have businesses within Cumberland, Hancock, Knox, Lincoln, Sagadahoc, Waldo, Washington, and York counties qualify for tax relief as this time.

In Rhode Island, individuals that reside or have businesses within Kent, Providence, and Washington counties qualify for tax relief as this time.

An “Affected <a>(“Exchangor" or "Exchanger") Individual or entity desiring an exchange. Taxpayer</a>” includes individuals who live, and businesses whose principal place of business is located in, the Covered Disaster Area. Affected <a>(“Exchangor" or "Exchanger") Individual or entity desiring an exchange. Taxpayers</a> are entitled to relief regardless of where the relinquished property or replacement property is located. Affected <a>(“Exchangor" or "Exchanger") Individual or entity desiring an exchange. Taxpayers</a> may choose either the General Postponement relief under Section 6 OR the Alternative relief under Section 17 of Rev. Proc. 2018-58. <a>(“Exchangor" or "Exchanger") Individual or entity desiring an exchange. Taxpayers</a> who do not meet the definition of Affected <a>(“Exchangor" or "Exchanger") Individual or entity desiring an exchange. Taxpayers</a> do not qualify for Section 6 General Postponement relief.

Option One: General Postponement under Section 6 of Rev. Proc. 2018-58 (Affected Taxpayers only). Any 45-day deadline or 180-day deadline (for either a forward or reverse exchange) that falls on or after the Disaster Date above is postponed to the General Postponement Date. The General Postponement applies regardless of the date the <a>Those certain items of real and/or personal property described in the relinquished property contract and qualifying as “relinquished property” within the meaning of Treasury Regulations Section 1.1031(k)-1(a); The "Old Asset”, property or properties given up or conveyed by a taxpayer as part of a 1031 exchange. Relinquished</a> Property was transferred (or the parked property acquired by the EAT) and is available to Affected Taxpayers regardless of whether their exchange began before or after the Disaster Date.

Option Two: Section 17 Alternative (Available to (1) Affected <a>(“Exchangor" or "Exchanger") Individual or entity desiring an exchange. Taxpayers</a> and (2) other taxpayers who have difficulty meeting the exchange deadlines because of the disaster. See Rev. Proc. 2018-58, Section 17 for conditions constituting “difficulty”). Option Two is only available if the relinquished property was transferred (or the parked property was acquired by the EAT) on or before the Disaster Date. Any 45-day or 180-day deadline that falls on or after the Disaster Date is extended to THE LONGER OF: (1) 120 days from such deadline; OR (2) the General Postponement Date. Note the date may not be extended beyond one year or the due date (including extensions) of the tax return for the year of the disposition of the relinquished property (typically, if an extension was filed, 9/15 for corporations and partnerships and 10/15 for other taxpayers).

<a href="https://www.irs.gov/newsroom/irs-announces-tax-relief-for-taxpayers-imp… for full details on the Maine tax relief from the IRS</a>.

<a href="https://www.irs.gov/newsroom/irs-announces-tax-relief-for-taxpayers-imp…; title="IRS Tax Relief Rhode Island December 17, 2023 Severe Storms and Flooding">Visit for full details on the Rhode Island December 17th Storms tax relief from the IRS.</a>

The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.

Tue, 10/22/2024 - 17:53

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Understanding How Biden’s Proposed Budget Impacts 1031 Exchanges

03/20/24

The US Department of Treasury released their General Explanations of President Biden’s FY 2025 Budget which proposes hard limits be ...

Authored by: meredithb@accruit.com

Authored on: Wed, 03/20/2024 - 15:21

Company and Industry News

<h2 aria-level="2" paraeid="{83172698-aa5a-471d-8777-37100b25e616}{226}" paraid="69982885" role="heading">Biden’s Budget on 1031 Exchanges </h2>

The US Department of Treasury released their General Explanations of President Biden’s FY 2025 Budget, also referred to as the “Green Book”, which proposes hard limits be set on IRC Section 1031. The proposed budget suggests that 1031 Exchanges are a loophole, as they delay the payment of tax on real estate transactions as long as the Exchanger continues reinvesting in real estate. It is believed that this equates to an interest-free loan from the government, potentially indefinitely, and real estate is the only asset that gets this “sweetheart deal.” The proposal would permit deferrals of gain up to an aggregate amount of $500,000 for individuals ($1 million for married couples filing jointly) annually for similar real estate exchanges. Any gains from 1031 Exchanges above $500,000 (or $1 million for married couples filing jointly) in a year would be recognized in the year the Exchanger transfers the real property and subject to tax.

<h2 aria-level="3" paraeid="{83172698-aa5a-471d-8777-37100b25e616}{246}" paraid="2075113925" role="heading">Effect on 1031 Exchanges </h2>

If a $500,000 cap on 1031 Exchanges were to be implemented, research shows it would have negative economic consequences. Below are a few of the many reasons why a $500,000 limit on 1031 Exchanges would be harmful to the economy:

Impact on Real Estate Investment and Liquidity: In real estate transactions, 1031 Exchanges are often utilized to defer capital gains taxes, motivating property owners to reinvest in other properties. However, setting a cap of $500,000 on these exchanges might hinder investors' ability to engage in larger and more complex transactions, potentially reducing liquidity in the real estate market.

Reduced Property Transactions: A limit might dissuade property owners from engaging in 1031 Exchanges due to the potential of increased tax burdens. Consequently, this could lead to a decrease in property transactions, in turn, slowing economic activity within the real estate sector.

Potential Negative Effect on Small Businesses: Setting a limit on 1031 Exchanges could have a negative, disproportionate impact on small businesses, as well as investors who depend on 1031 Exchanges in managing their property portfolios. Biden’s cap could hinder investors’ means to expand, relocate, or optimize their property holdings.

Impact on Economic Growth: 1031 Exchange research shows that they stimulate economic growth by promoting investment, job creation, and improvements to properties, thus improvements to neighborhoods, cities, etc. Setting a hard cap on 1031 Exchanges would impede these economic accelerators.

A <a href="https://1031buildsamerica.org/study-ling-petrova-2020/" rel="noreferrer noopener" target="_blank">microeconomic study</a> conducted by Professors Ling & Petrova tracked 1.6 million properties over 20 years. It concluded that if 1031 was either limited or eliminated, transactional activity in real estate would decrease, cost of capital would increase, and GDP would contract. For example, elimination of Section 1031 would increase rent prices by approximately 6%. In further defense of 1031 Exchanges, Ernst & Young found in 2021 that Section 1031:

<ul role="list">
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Supported approximately 976,000 jobs  
</li>
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Created $48.6 billion of labor income  
</li>
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Added $97.4 billion to US GDP 
</li>
</ul>

All of this related economic activity returns over $13 billion in taxes annually for the Federal, State, and Local treasuries. On top of that, 1031 Exchangers pay an extra $6 billion in federal income taxes because they forgo depreciation on their replacement properties. Together, this equates to almost $20 billion of tax revenue per year.

<h2 aria-level="2" paraeid="{83c955ef-5b19-4fb0-abc3-a443c8d66c48}{125}" paraid="1775660062" role="heading">Benefits of 1031 Exchanges  </h2>

The benefits of 1031 Exchanges are not isolated to one sector of the American economy. On the contrary, 1031 Exchanges benefit individuals and businesses of all shapes, sizes, and values.

Section 1031 helps Exchangers by allowing companies to keep cash in their businesses. It lets investors change their property ownership to match their current needs without being stuck with outdated setups. Limiting tax restrictions helps properties to be used in the most efficient way and reduces friction for real estate owners and their businesses.

<h3 aria-level="3" paraeid="{83c955ef-5b19-4fb0-abc3-a443c8d66c48}{149}" paraid="1219240977" role="heading">1031 Exchanges Create Jobs </h3>

1031 Exchanges create job opportunities for various professionals such as contractors, skilled tradespeople, lenders, Qualified Intermediaries (QIs), title insurers, escrow companies, surveyors, building material suppliers, and more.

<h3 aria-level="3" paraeid="{83c955ef-5b19-4fb0-abc3-a443c8d66c48}{161}" paraid="842197862" role="heading">Revitalization of Neighborhood and Increase in Affordable Housing </h3>

Exchanges also help low-income, hard-hit, and distressed communities where outside sources of capital are less available. Properties exchanged by REITs and institutional investors have the expertise to take on the larger projects such as repurposing malls, hotels, and office buildings that were shuttered because of the pandemic.

In addition, roughly 40% of like-kind exchanges involve rental housing. Section 1031 plays a crucial role in bridging financing gaps for affordable housing. Unlike the low-income housing tax credit, developers can utilize Section 1031 to fund land acquisition expenses for new affordable housing initiatives.

<h3 aria-level="2" paraeid="{83c955ef-5b19-4fb0-abc3-a443c8d66c48}{187}" paraid="2031430453" role="heading">Result of Budget Proposal </h3>

The President’s budget projects that capping 1031 Exchanges would generate $1.86 billion in annual revenue. However, considering that tax revenue from 1031 Exchanges is roughly ten times greater than the projected revenue from limiting them, it is mathematically clear that restricting 1031 Exchanges would be an ineffective and counterproductive measure.

<h2 aria-level="2" paraeid="{83c955ef-5b19-4fb0-abc3-a443c8d66c48}{209}" paraid="22646633" role="heading">Industry Support of 1031 Exchanges  </h2>

In April, much of the 1031 Exchange industry will come together at the Federation of Exchange Accommodators (FEA) Midyear meeting in Washington, D.C., to provide education on 1031 Exchanges. Members of the FEA’s Government Affairs committee will convene at the nation’s capital to speak with members of both the Senate Finance Committee and House Ways and Means Committee on the importance of keeping 1031 Exchanges in their current form.

Accruit, an Inspira Financial company, is proud to be among this group. Accruit’s CEO, Brent Abrahm, will be joined by Steven Holtkamp, CFO and FEA board member, Max Hansen, Managing Director, and Jonathan Barge, Senior Director, to ensure our clients’ interests are well represented to our legislature.

In conclusion, President Biden's FY 2025 Budget proposal moves to limit Section 1031, threatening to cause negative effects on the real estate market, as well as the economy. As leaders in the industry, Accruit will rally together with colleagues to lobby in support of IRC Section 1031. It is important for policymakers to consider the broader implications and critical role 1031 Exchanges play in strengthening economic stability.

The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.

Wed, 03/20/2024 - 17:03

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IRS Announces Tax Relief for West Virginia Taxpayers Impacted by Severe Storms

02/07/24

The IRS has issued tax relief for West Virginia residents or business owners, in multiple counties, that have been impacted ...

Authored by: marketing

Authored on: Wed, 02/07/2024 - 23:42

Company and Industry News

<h2>IRS has issued Tax Relief for parts of West Virginia impacted by severe storms, flooding, landslides, and mudslides that began August 28, 2023.</h2>

The General postponement date is June 17, 2024.

Individuals that reside or have businesses within Boone, Calhoun, Clay, Harrison, and Kanawha counties qualify for tax relief as this time.

An “Affected Taxpayer” includes individuals who live, and businesses whose principal place of business is located in, the Covered Disaster Area. Affected Taxpayers are entitled to relief regardless of where the relinquished property or replacement property is located. Affected Taxpayers may choose either the General Postponement relief under Section 6 OR the Alternative relief under Section 17 of Rev. Proc. 2018-58. Taxpayers who do not meet the definition of Affected Taxpayers do not qualify for Section 6 General Postponement relief.

Option Two: Section 17 Alternative (Available to (1) Affected Taxpayers and (2) other taxpayers who have difficulty meeting the exchange deadlines because of the disaster. See Rev. Proc. 2018-58, Section 17 for conditions constituting “difficulty”). Option Two is only available if the relinquished property was transferred (or the parked property was acquired by the EAT) on or before the Disaster Date. Any 45-day or 180-day deadline that falls on or after the Disaster Date is extended to THE LONGER OF: (1) 120 days from such deadline; OR (2) the General Postponement Date. Note the date may not be extended beyond one year or the due date (including extensions) of the tax return for the year of the disposition of the relinquished property (typically, if an extension was filed, 9/15 for corporations and partnerships and 10/15 for other taxpayers).

<a href="https://www.irs.gov/newsroom/irs-west-virginia-taxpayers-impacted-by-se…; title="IRS Tax Relief for West Virginia Taxpayers Effected by Flooding">Visit for full details on the tax relief from the IRS.</a>

Mon, 01/13/2025 - 19:06

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