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W E A LT H M A N A G E M E N T / R E T I R E M E N T F O C U S P H O T O / T I M G R E E N WAY Tax deferred exchanges are ubiquitous in the real estate industry here in Maine. — Chris Paszyk Boulos Co. Chris Paszyk, of Boulos Co. at 701 Forest Ave., a 1031 tax exchange property where the buyer took a chance on an empty building with a lower price R ecently, on Forest Avenue in Portland, a 12,658-square- foot former Rite Aid sold for $1.5 million. ree years ago, a $20 million deal that spanned California to Maine, involving four properties, worked its magic for several investors. Both commercial real estate deals, like many investment prop- erty transactions across Maine and the country, were made possible with a 1031, or "like-kind," real estate exchange. e tax benefit, named after its IRS section code, allows an investor to put off capital gains tax from a sale by investing the money into a similar property. e tax deferment has made the commercial real estate market hum for decades. at may all change, though with President Joe Biden's tax plan, which proposes that 1031s be eliminated for investors with incomes higher than $400,000. "Many in our industry have concerns about the proposed elimination," says Chris Paszyc, a partner with Boulos Co. in Portland. "Tax deferred exchanges are ubiquitous in the real estate industry here in Maine." e exchanges account for 10% to 15% of commercial real estate deals, though it fluctuates depending on the economy and inventory. Brokers and others in the invest- ment industry say the proposed cap would decrease supply, stagnate prices and have a domino effect on real estate services and real estate and property taxes. "It would cause a quagmire," says Matt Pouiliot of Pouliot Real Estate in Augusta. "e 1031 is a primary driver of a lot of the real estate that we deal with." 'It's a good thing' e 1031 tax exchange was created in 1921, and originally used for types of exchanges where cash wasn't readily available, says Cheryl Johnson, a tax attorney with Verrill. "I get a piece of land, you get a piece of land," and no money changes hands, she says. "Back in the day, people didn't actually have the cash to pay the tax." Over the years, it's been honed almost solely into a property investment tool. Biden's concern is that wealthy inves- tors can defer paying taxes indefinitely. A wide spectrum of those in the investment industry say, however, that like-kind exchanges benefit a broad spectrum of investors and stimulate the economy. V O L . X X V I I N O. I V F E B R UA R Y 2 2 , 2 0 2 1 16 Is An investment tool that's helped keep Maine's commercial real estate market stay hot faces elimination B y M a u r e e n M i l l i k e n 1031 all done?

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