A tax loophole that began in 1920s America is at risk of being eliminated in President Joe Biden’s new $1.9 trillion economic plan, in which he plans to fund new social programs.

The tax break for real estate owners has allowed them to defer paying capital gains on property sales, and instead use the profits to buy more properties. Real Estate Agent Jim Bottrell explained the 1031 Exchange applies to all investors and would be really detrimental to the economy if Biden ended it.

Jim added that 10% of real estate transactions involve 1031 exchanges, and Wall Street uses this to buy huge shopping centers and other developments.

The Biden proposal would remove 1031 exchanges (named after the U.S. tax code section) on real estate profits worth more than $500,000, so there would be no more incentive for people to acquire massive developments, and the Wall Street investors may move into residential real estate.

Jim Bottrell, Owner at Jim Bottrell Real Estate Team, joined KUSI’s Lauren Phinney for a discussion on President Biden’s new economic plan.

Watch the segment here