1031 Exchange Repeal and Cap Proposals: A Running Tracker

As of September 30, 2026, section 1031 is unchanged: real property only, no dollar cap, and no published Treasury proposal to add one. The last enacted change was the 2017 tax act, which removed personal property. A $500,000 cap appeared in four consecutive Treasury Greenbooks, fiscal 2022 through fiscal 2025, and was never written into a bill that passed. This tracker lists each proposal with its source document so you can check status in one place. We update it when something moves.

Where the law stands today

Section 1031(a)(1) reads: “No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.”

The words “real property” were substituted for “property” by section 13303 of Public Law 115-97 in December 2017. The amendment applies to exchanges completed after December 31, 2017, with a transition rule: it does not apply if the relinquished property was disposed of, or the replacement property received, on or before December 31, 2017. The amendment notes on the statute list no change since then. Public Law 119-21 of July 4, 2025 rewrote bonus depreciation and opportunity zones but left section 1031 alone, and the Federal Register shows no IRS rulemaking on like-kind exchanges in 2025 or 2026 to date.

The tracker

Each entry gives the proposal, what it would have done, its effective date as written, and its outcome.

• Fiscal 2015 Greenbook (March 2014). Limit deferral on real property exchanges to $1,000,000, indexed, per taxpayer per taxable year, with Treasury authority to aggregate related-party exchanges. Effective for exchanges completed after December 31, 2014. Treasury’s stated reason: “There is little justification for allowing deferral of the capital gain on the exchange of real property,” adding that “many, if not most” exchanges are three-party transactions run through qualified intermediaries. Not enacted. Source.
• Tax Cuts and Jobs Act (December 2017). Enacted. Personal property removed from section 1031; real property unchanged; transition rule above. Source.
• Fiscal 2022 Greenbook (May 2021). Allow deferral of up to $500,000 of gain per taxpayer per year ($1,000,000 for a joint return); gain above that “would be recognized by the taxpayer in the year the taxpayer transfers the real property subject to the exchange.” Effective for exchanges completed in taxable years beginning after December 31, 2021. Revenue table: $19,550 million over fiscal 2022 to 2031. Not enacted. Source.
• Fiscal 2023 Greenbook. Same cap, effective for taxable years beginning after December 31, 2022. Not enacted. Source.
• Fiscal 2024 Greenbook. Same cap, effective for taxable years beginning after December 31, 2023. Not enacted. Source.
• Fiscal 2025 Greenbook (March 2024). Same cap, effective for taxable years beginning after December 31, 2024. Revenue table: $680 million in fiscal 2026 rising to $2,369 million in 2034, $8,504 million over 2025 to 2029 and $19,678 million over 2025 to 2034. Not enacted. Source.
• Fiscal 2026 and 2027. Treasury’s revenue proposals page lists fiscal 2025 as the most recent Greenbook. No cap proposal has been published since.
• Public Law 119-21 (July 2025). Enacted. No amendment to section 1031.

What a cap would do mechanically

The Greenbook design is an annual allowance, not a lifetime one, and it applies per taxpayer. A single filer with a $1,400,000 gain would recognise $900,000 in the year of transfer and defer $500,000; a joint return would recognise $400,000. Nothing in the text excludes the depreciation recapture layer, and the excess is recognised “in the year the taxpayer transfers the real property”, which for a deferred exchange is the year the relinquished property closes, not the year the replacement is acquired. Those are the proposal’s words; a bill could differ.

Grandfathering patterns worth knowing

The record shows two patterns. The 2017 act protected exchanges in progress: if either leg of the exchange happened by the cut-off, the old law applied to the whole exchange. The Greenbook proposals instead key to exchanges “completed in taxable years beginning after” a date. Under that wording an exchange that opened in December and closed in February would fall under the new rule. If a cap ever reaches bill text, the effective-date clause is the first thing to read.

How to read the next headline

A Greenbook is an administration’s request to Congress, not a bill. The sequence that matters is bill text, a committee markup, a floor vote and a signed law, each with its own effective date. The Joint Committee on Taxation treats like-kind deferral as a tax expenditure; Treasury’s Office of Tax Analysis recorded the committee’s fiscal 2014 estimate at $5.7 billion for corporations and $3.0 billion for individuals (source). Those estimates are what a repeal bill would be scored against, and they reappear every budget season. What industry and academic data say about who actually uses exchanges is covered in our data post.

What to do now

1. Do not sell early because of a proposal. Wait for bill text with an effective date; four Greenbooks produced none.
2. If a bill does move while you are mid-exchange, the completion date is what counts. A DST can close in days once identified, which is why many exchangers keep one on the list; see how quickly a DST closes.
3. Know the number at stake. The planned guide on what tax you owe without an exchange walks through the layers, and the tax hub has the 2026 thresholds.
4. If a sale is already in motion, start a proposal so the replacement options are mapped before day 45.

Sources

• 26 U.S.C. section 1031, text and amendment notes
• Treasury, General Explanations of the Administration’s Fiscal Year 2015 Revenue Proposals
• Treasury, General Explanations, Fiscal Year 2022
• Treasury, General Explanations, Fiscal Year 2023
• Treasury, General Explanations, Fiscal Year 2024
• Treasury, General Explanations, Fiscal Year 2025
• Treasury, Revenue Proposals index
• Treasury Office of Tax Analysis, The Tax Treatment of Like Kind Exchanges (2014)