US tax code rewrite favours real estate over art

New York

OF THE many winners and losers in the overhaul of the tax code, one change makes real estate investors the biggest beneficiaries, while art collectors seem to have drawn the short straw.

Real estate investors were given a gift after Congress voted to maintain what are known as 1031 exchanges, a section in the tax code that allows for property to be sold tax-free as long as the proceeds are used to buy more property. The loophole had been open to others as well, including art collectors, classic car aficionados and franchisees, but not any longer.

Investors whose real estate holdings are comparatively modest - and their heirs - were given an added bonus: The estate tax exemption for couples doubled to US$22.4 million, allowing those investors to conceivably pay no tax on their properties, ever. They can use exchanges to buy ever more valuable…