Section 1031 of the federal tax code allows investors to swap “like kind” properties without having to pay the hefty capital gains taxes they’d owe if they simply sold their real estate. With so many real estate investors engaging in 1031 exchanges, tax revenues on these sales have been falling.

To close, or modify this tax “loophole” a bill that’s already passed the Senate would narrow the definition of “like kind” in certain agricultural real estate transactions. This bill would force potentially large numbers of farmers to sell, rather than exchange, their properties and pay high capital gains taxes that they’d currently be allowed to defer.

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