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News & Press: Sacramento Report

Conformity with Federal Law for California Tax Deferred Exchanges

Tuesday, July 16, 2019  
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Assembly Bill 217 (Burke) proposes modified California conformity with federal tax law changes regarding tax-deferred exchanges. The amended federal law excludes the recognition of any gain or loss on the exchange of real property held for productive use in a trade or business or for investment, if that property is exchanged solely for property of a like kind that is to be held either for productive use in a trade or business or for investment, unless an exception applies.

AB 217 generally conforms California law to federal income tax law, as amended by the federal Act, by limiting the exclusion to the recognition of any gain or loss on the exchange of real property. However, to ensure that this conforming change does not adversely impact middle-class taxpayers, AB 217 limits this provision to individual taxpayers making over $250,000 a year, or $500,000 if filing jointly. Thus, taxpayers falling below these thresholds will still be able to benefit at the state level from like-kind exchanges for personal property.

California Land Title Association


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