The scheme was actually introduced in 1921 to give it to farmers in the United States to make it easier to swap fields with one another - and thus to carry out land consolidations. In the past hundred years, however, a completely different profession has benefited: US real estate sharks.
We are talking about the so-called 1031 exchange rules. They provide that profits from real estate transactions do not have to be taxed - provided that the money is used to buy another property relatively soon after the property has been sold. According to a report by the news agency »Bloomberg«, this regulation has, among other things, ex-president <br><br>Donald Trump helped build a fortune and real estate empire. His son-in-law's family too Jared Kushner consequently used the clause.
Benefit goes primarily to very wealthy people
The scheme works like this: An investor invests a million dollars in a property. If he later sells it for $ 10 million, he does not have to pay tax directly on the profit of $ XNUMX million as long as he invests the money in another property within six months. Combined with another tax loophole, the clause effectively enabled entire dynasties of real estate investors to make profits without ever having to pay tax on them, so "Bloomberg". "The benefits go disproportionately to wealthy people," quoted the news agency Mitchell Gans, professor of tax law at Hofstra University.
The US government wants Trump's successor to practice this Joe Biden now put a stop to it. The Democrats are striving to reform the clause: It should be capped at an exemption limit of $ 500.000. But there is resistance. The Wall Street Journal, which is close to the Republicans, warns of losses for many farmers. The real estate industry is also in a storm.
Most Democratic MPs are convinced that the 1031 rules are "bad politics" and that there is no plausible reason for these tax breaks, "Bloomberg" quotes tax expert Victor Fleischer. However, there are also "real estate people in every constituency who are fighting very hard for it." In the end, it would be more disadvantageous for many MEPs if they push the reform forward too aggressively.