Real estate like-kind exchanges are an important vehicle for disposing of and acquiring properties and support the nation's financial growth, job creation and economy, according to a new report from the National Association of REALTORS®.
The Like-Kind Exchanges: Real Estate Market Perspectives 2015 survey of NAR's commercial and residential members found that real estate investors and commercial property owners place a very high priority on current like-kind exchange tax rules; 40 percent indicated that transactions would not have occurred in the absence of the tax provision, and 56 percent said even if the project would have occurred it likely would have been smaller in scale.
For a significant proportion of real estate market participants, like-kind exchanges (LKE) provide an important vehicle to dispose and acquire property.
Like-kind exchanges are available to individuals, partnerships, corporations, limited liability companies, as well as trusts.
The main requirement of a like-kind exchange is that the disposition of one property and acquisition of another property must be part of an integrated transaction, rather than two individual transactions.
REALTORS® are active participants in like-kind exchanges as investors, brokers and agents, intermediaries and professional advisors.
Sixty-three percent of REALTORS® participated in a like-kind exchange transaction during 2011-14.
In 2014, REALTORS®’ average fair market value of all transactions was $7.0 million
Like-kind exchanges accounted for 39 percent of total FMV, or $2.7 million per respondent.
Ninety-six percent of REALTORS® indicated a decrease in real estate values in case of repeal of like-kind exchange provisions.
Like-kind exchanges in which REALTORS® participated created between 10 and 35 new jobs, mostly resulting from spending on building improvements following acquisition.