Proposals to cap or eliminate 1031 exchanges come up almost every budget cycle, and 2026 is no different. As of now, the 1031 exchange remains fully intact — but here's why your exit strategy shouldn't depend on Congress either way.
Every few years, proposals surface in Congress to cap or repeal the 1031 like-kind exchange, usually framed as a way to raise revenue. Some proposals have suggested capping deferred gains at $500,000 or eliminating the exchange for certain property types. None of these have passed. As of today, 1031 exchanges remain available under current law with no size cap on real property.
This isn't the first time. Similar proposals surfaced in prior administrations' budget frameworks and went nowhere in Congress. It's a recurring revenue-raiser idea, not a settled policy shift — treat headlines accordingly and confirm current status with your own advisor before making a decision based on speculation.
Whether or not 1031 survives future legislation, it was never a great fit for everyone in the first place — it only helps you if you actually want to buy another property. If your real goal is to get cash out of real estate without a full tax hit in one year, there's a structure that doesn't depend on 1031 surviving at all.
You sell your property outright — the buyer pays 100% cash and closes. Instead of taking the whole gain at once, the payment obligation is assigned to a licensed third party that funds an A-rated insurance-carrier annuity, and you receive payments over a term you select, taxed only as received. It is not seller financing, and it doesn't require you to buy anything. It works the same way regardless of what happens to the 1031 rules, because it lives in an entirely separate section of the code.
A $2M gain taken all at once can trigger roughly $700K in combined federal capital gains, NIIT, and California tax. Spread across a decade or more, the same gain can trend toward $500K in total tax — illustrative numbers, not guarantees, and dependent on your income and the term you choose.
A §453 structure has to be set up before your purchase agreement is signed and before escrow opens. If you're sitting on the fence waiting to see what Congress does with 1031, you may be losing the window to set up a structure that works no matter what they decide.
Every few years there's a new round of "1031 is going away" articles, and every few years sellers make rushed, expensive decisions because of them — buying a replacement property they don't actually want, or panic-selling before they've thought it through. The better approach is to build your exit strategy around what you actually want: keep investing in real estate, or take cash and be done.
No. As of now, 1031 exchanges remain fully available under current law. Proposals to cap or repeal it have come up in past budget cycles but have not been enacted.
No. IRC §453 is a separate, long-standing part of the tax code covering installment sale timing — it's not tied to the 1031 like-kind exchange rules.
Rushing into a 1031 you don't actually want, just because you buy another property, can lock you into landlording longer than you'd like. Decide based on what you actually want to do with the property, not legislative speculation.
No. §453 has been law for roughly a century and isn't part of the current 1031 policy debate.
Congress.gov and major tax publications track active bills. As always, confirm current law with your own CPA or tax attorney before making a decision.
Plug in your sale price, basis, and state — the calculator runs your exact 2026 federal + California tax and shows what a Structured Installment Sale keeps in your pocket.
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Or talk it through: 213-340-2018 · Hans Goldstein · NPN 20602398. Educational only — not tax, legal, or accounting advice.
