How to Successfully Complete a 1031 Exchange & Defer Capital Gains Taxes

Are you thinking about selling an investment property? If so, you may be facing a significant capital gains tax bill. Fortunately, there’s a powerful strategy that real estate investors use to defer those capital gains taxes and continue building long-term wealth: the 1031 exchange.

What Is a 1031 Exchange?

A 1031 exchange (also known as a like-kind exchange) allows real estate investors to sell one investment property and reinvest the proceeds into another similar property without immediately paying capital gains taxes. This means you can keep more of your money working for you, grow your portfolio faster, and defer taxes until a later date.

Why Use a 1031 Exchange?

Investors choose a 1031 exchange for several reasons:

• Tax deferral: Avoid paying capital gains taxes at the time of sale

• Wealth building: Reinvest full proceeds into a new property

• Portfolio growth: Upgrade or diversify your investments

• Cash flow optimization: Move into properties with better returns

However, to take advantage of these benefits, you must follow strict IRS rules. Missing even one step can disqualify your 1031 exchange.

Is a 1031 Exchange Right for You?

A 1031 exchange can be a powerful tool for real estate investors looking to defer taxes and grow their portfolios strategically. But success depends on careful planning, strict compliance, and working with the right professionals.

Get the Help You Need with Your Like-Kind Exchange

Thinking about a 1031 exchange? Don’t try to go it alone! Having a qualified intermediary on your team gives you peace of mind. You can rest assured that your 1031 exchange is in good hands with the intermediaries at CPEC1031, LLC. We have more than twenty years of experience working with taxpayers from across the United States on 1031 exchanges of all types. Our team is well-established and equipped to help you through all the ins and outs of the like-kind exchange process. Contact us today at our Minneapolis office to learn more about the exchange process and see how we can help.

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

3 Reasons to do a 1031 Exchange in 2026

There are many great reasons to do a 1031 exchange, but many taxpayers are unaware of the true benefits of conducting a like-kind exchange under section 1031 of the Internal Revenue Code. In this article, we talk about three reasons why you should consider a 1031 exchange in 2026.

Capital Gains Tax Deferral

The greatest benefit of any 1031 exchange is capital gains tax deferral. In most standard sales of investment real estate, you need to pay capital gains taxes on the net proceeds, which can add up to a huge tax bill. This potential tax burden is often an impediment that keeps investors from selling their property. A 1031 exchange is a great solution to this problem, in that it allows you to defer that capital gains tax bill. There are, of course, caveats. Instead of pocketing your net proceeds from the sale, you must reinvest those proceeds into a replacement property.

Portfolio Diversification

A 1031 exchange must be done with like-kind property that’s held for investment or business use. As long as your property fits that definition, you can exchange out of and into many different types of property. As such, a 1031 exchange is a great way to diversify your portfolio with different types of real estate.

Investment Continuation

With a straight forward sale of real estate, you pay a sizable chunk of change to the government in the form of taxes. With a 1031 exchange, you get to defer that tax burden and keep your money working for you in a continuation of your investment.

Give Yourself Plenty of Time to Complete Your 1031 Exchange

You don’t have a lot of time to complete a 1031 exchange so it’s paramount that you give yourself plenty of lead time to set yourself up for success. Contact a qualified intermediary well in advance of the sale of your relinquished property to discuss the details of your exchange. That will allow you to cover all of your bases so you’re not scrambling at the last minute to put together your exchange. The qualified intermediaries at CPEC1031, LLC are here to help you through all the details of your next 1031 exchange of like-kind real estate.

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

Consider Your Exit Plan When Investing in Real Estate

When it comes to real estate investing, most people focus their attention on buying the property in question. That’s obviously an important aspect, but the best real estate investors take it a step further and plan their exit strategy.

A Good Real Estate Exit Strategy

A good exit strategy will do all of the following:

• Defer capital gains taxes while transitioning assets.

• Move from active management to passive income streams.

• Preserve wealth for estate planning purposes.

All of this can be achieved by conducting a 1031 exchange. Like-kind exchanges under section 1031 of the Internal Revenue Code allow taxpayers across the United States to defer their capital gains taxes when selling qualifying real estate. This allows you to continue your investment into a bigger property and set yourself up for success far into the future.

When you’re thinking about your next real estate investment, consider a 1031 exchange as a way to plan your exit appropriately.

Start Your Like-Kind Exchange

Start the process of deferring taxes on the sale of investment real estate by contacting a qualified intermediary at CPEC1031, LLC today. Our team is here to help you through all the stages of the 1031 exchange process – from the sale of your relinquished property, to the acquisition of your replacement property. We have decades of experience in the 1031 exchange industry and can help facilitate your 1031 exchange, no matter how complex it might seem. Reach out to us at our Twin Cities office today to learn more about the process and see how we can help.

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

The Benefits of Speaking with a Qualified Intermediary Before Starting Your 1031 Exchange

Timing is crucial in any 1031 exchange, but many taxpayers try to put together a 1031 exchange at the last minute. While it is possible to piece things together at the zero hour, it’s not ideal by any means. In this article, we are going to discuss some of the benefits of talking to a qualified intermediary before beginning your 1031 exchange of real estate.

Give Yourself (And Your Intermediary) Plenty of Time

There are strict deadlines that govern 1031 exchange transactions. You only have 180 days total to finish your exchange once you’ve started it. And you’ve only got the first 45 of those 180 days to identify your replacement property. If you sell your relinquished property and decide two weeks later that you want to do a 1031 exchange, you’ve already lost precious time. That’s why it’s important to speak with a qualified intermediary well in advance of selling your relinquished property. Give yourself and your intermediary as much time as possible to set yourself up for a successful exchange.

Speak with a 1031 Exchange Professional

If you have questions about the 1031 exchange process and how it can help you defer capital gains taxes when selling investment real estate, speak with a 1031 exchange professional at CPEC1031, LLC today! Our team of qualified intermediaries has more than twenty years of experience facilitating exchanges of all types – from forward to reverse exchanges and everything in between! We can work with you throughout the entire exchange process and ensure you are aware of all the various rules and regulations of section 1031. Set up a time to chat with our team today by contacting us at our downtown Minneapolis office!

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

3 Issues a 1031 Exchange Can Resolve

There are a lot of potential issues that come with owning investment or business real estate. In this article, we are going to discuss three issues that a 1031 exchange can potentially solve.

You Want to Move Your Property to a Different Location

Sometimes real estate owners want to move to a different geographic area but they’re reluctant to do so because of where their investment property is located. 1031 exchanges can be done throughout the United States, so long as all involved property is like-kind and held for investment or business purposes. For example, you can sell a triplex in Minnesota and exchange into a retail space in Texas.

You Want Property That’s Less Management-Intensive

Many real estate investors that own management-intensive property (such as rental properties) don’t want to deal with the management and maintenance issues that come with owning such a property. This is especially true when investors start nearing retirement age. A 1031 exchange can help you sell your management-intensive property and exchange into a much less management-intensive property – all while deferring capital gains taxes.

You Don’t Want to Pay Capital Gains Taxes

One of the biggest causes for pause when considering a sale of real estate is the capital gains tax bill that comes with a straight forward sale. A 1031 exchange allows you to defer this capital gains tax bill and reinvest your proceeds into a bigger property that will continue to compound into the future.

Contact CPEC1031, LLC For Help With Your Like-Kind Exchange

CPEC1031, LLC is here to help with your next like-kind exchange of real estate! Our qualified intermediaries have been working on exchanges under section 1031 of the Internal Revenue Code for more than two decades. We have a proven track record of successful 1031 exchanges and can help you through the specific details of your real estate exchange. Contact our team today at our Twin Cities office, which is located in downtown Minneapolis. We work with clients throughout the Twin Cities Metro area, the state of Minnesota, and across the United States.

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved