California Takes Aim at 1031 Exchanges With AB2640

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California Takes Aim at 1031 Exchanges With AB2640

Post by REIT Wrecks » Wed Mar 24, 2010 7:24 pm

California State Assembly member [url=http://democrats.assembly.ca.gov/members/a31/]Juan Arambula (D-Fresno)[/url] is attempting an end run around the California state constitution with the introduction of AB2640, which would eliminate certain state tax benefits currently allowed under the federal code for real estate sales. If enacted, the bill would take effect retroactively as of 1/1/10.

AB 2640 is intended to address the California budget deficit by increasing tax revenues, and it's being done via a bill that can be passed by a simple majority vote of the California legislature, whereas the imposition of new taxes normally requires a super majority approval and the Governor's signature.

Regardless of how you feel about tax fee exchanges, TIC sponsors, qualified intermediaries or any of the rest of the cottage industries that have sprung up around Section 1031 of the Code, this state-level tyranny can't be tolerated. What good is a state constitution if some assembly member nobody's ever heard of can almost single-handedly circumvent it? This thing is so totally ill-conceived that it hardly deserves the space I have given it here. If you're a California resident, please make sure this bill is sent right back to where it came from.

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