Condos to Cornfields

Fantastic news for real estate investors is that industry lobbyists have successfully axed an attempt by sneaky tax reformers to drastically restrict the legal nature of real estate exchanges.

The obnoxious 1031 amendment which was snuck rather unceremoniously into the hidden depths of the present Farm Bill would, if approved, have made it illegal to benefit from tax shelters in exchanging real estate without the transaction involving the same types of "like-kind" property.

That means that if you, as a cornfield real estate owner, had a notion to sell your land in rural Sonoma County and purchase a condo in a neighboring city, you would have been restricted by law from the benefits of long-standing tax exchange.

Unless your apartment house in Santa Rosa was swiftly exchanged for apartments in, say, Petaluma, you'd have been all out of the flexibility which has traditionally encouraged investors to keep the market alive and afloat.

Far fewer exchanges would have followed the passing of this seemingly tiny technical amendment within the Farm Bill. One thing that would have increased for certain, however, would have been the volume of IRS audits.

So, that said, go ahead and sell your town home for a coffee shop or your rental cottage for a commercial office. It's the perfect time to deal.