One Sentence Argument
1031 exchanges allow wealthy real estate developers and their families to expand their holdings and build massive real estate empires without ever paying a cent in capital gains taxes.
1031 exchanges, or like-kind exchanges, are a gimmick in the tax code that benefits wealthy real estate developers (like the one currently sitting in the Oval Office). They particularly benefit their children, by working in sync with the stepped-up basis.
A like-kind exchange means that a real estate developer who sells one of his properties is able to avoid paying taxes on any increase in the value of that property as long as it’s reinvested in a similar property. This means that a developer like Donald Trump or Jared Kushner could sell one of their buildings, buy another building with the money from that sale, and keep doing so over and over without ever paying a cent of tax. When combined with the stepped-up basis, this means that families with extensive real estate holdings can avoid paying taxes on their properties forever.