Tax-free treatment of like-kind exchanges of real estate (other than held primarily for sale) was preserved but exchanges of personal property generally after 2017 will no longer qualify (including the portion of realty exchanges attributable to personal property associated with real property). The new provision applies to exchanges completed after December 31, 2017, unless it is a deferred exchange that started in 2017.
- The continuation of tax-free like-kind exchanges for realty represents an important item that the Act does not change, as a complete repeal could have a destabilizing effect on the real estate market (e.g., reduced purchases, sales, and reinvestment). This continuing benefit is particularly welcomed by real estate businesses as well as operating companies changing or expanding their place of operations.
- Large vehicle, transportation, and equipment lessors that have implemented large volume like-kind exchange structures may benefit from lower costs and a simplified structure by eliminating their LKE structures. It is possible, however, that individual states may “de-couple” from federal law and not allow 100% expensing of equipment which was intended to replace the need to use like kind exchanges for such property.