Limitation on use of like-kind exchanges to avoid tax on real estate gains

(a) Limitation on nonrecognition of gain Section 1031(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (4) Limitations (A) Annual limitation The amount of gain excluded from recognition under paragraph (1) with respect to any property of the taxpayer during the taxable year which is not qualified property shall not exceed $500,000. (B) Aggregate limitation The aggregate amount of gain excluded from recognition under subparagraph (A) by the taxpayer for all taxable years shall not exceed $1,000,000. (C) Qualified property For purposes of this paragraph, the term qualified property means property— (i) which is used for farming purposes, or (ii) which is exchanged for property that will serve the same specific purpose.. (b) Effective date The amendment made by this section shall apply to exchanges of real property after December 31, 2025.