New Rules for Like-Kind Exchanges Under the Tax Cuts and Jobs Act

In the past, taxpayers have reaped the benefits of deferring gain on a sale by entering a like-kind exchange of personal property, such as vehicles including machinery and equipment (ie: farm machinery). The Tax Cuts and Jobs Act has eliminated this perk beginning January 1, 2018. Congress felt that taxpayers received the benefit of direct expensing through the use of 100% bonus depreciation and section 179 deductions, so they shouldn’t also be eligible to defer any gain or loss through a like-kind exchange. The new law applies to business property only and a gain deferral through a like-kind exchange is still allowed for real property. If you’re considering buying and selling real estate in the near future, contact us for help.

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