Bill > S461

This bill modifies the taxation rules for 1031 exchanges in North Carolina, specifically addressing how non-like-kind property received in such an exchange is treated for state tax purposes. A 1031 exchange (named after section 1031 of the Internal Revenue Code) is a tax strategy that allows investors to defer capital gains taxes when exchanging similar types of investment or business properties. The bill adds a new provision to both corporate and individual income tax calculations that allows taxpayers to deduct any amount of non-like-kind property received in a 1031 exchange from their state taxable income, but only to the extent that this amount does not exceed the taxpayer's original basis in the property sold. This means that if a taxpayer receives cash or other non-real estate assets as part of a 1031 exchange, they can offset the taxable amount by their original property's cost basis. The changes will take effect for taxable years beginning on or after January 1, 2025, giving taxpayers and tax authorities time to prepare for the new rules.

https://www.ncleg.gov/BillLookUp/2025/S461