Video – Triple Net Lease: A DST Alternative

DSTs – syndicated properties that can only be sold to accredited investors as securities – are very popular right now. While DSTs can be great, they’re difficult for some investors to exchange into and can’t be utilized by everyone.

An alternative to the DST is the Triple Net Lease. I had a client back in the 1990s who would buy Arby’s locations on a triple net basis when nobody wanted to buy them. He had transitioned from management intensive apartments in South Minneapolis to triple net leased Arby’s locations. Eventually he sold those and 1031 exchanged into gas stations in Iowa.

The point is that there are alternatives to the securitized products offered by financial services firms. They are not identical in risk, however. With a triple net lease deal, you have a lot of eggs in one basket. If your tenant decides not to do what they’re supposed to do, then the value of the property will likely decline. You need to look at the value of the property in case it ever needs to be repurposed.

Defer Your Taxes with a 1031 Exchange of Investment Real Estate

Defer your capital gains tax burden by conducting a 1031 exchange of your investment real estate. As long as your property is held for investment purposes or for use in your trade or business, you are eligible for 1031 exchange treatment. Doing a 1031 exchange instead of a straight forward sale means that you get to defer the capital gains taxes on the sale and reinvest those proceeds into a bigger, better replacement property that will continue to compound over time. Reach out to CPEC1031, LLC today to learn more about the like-kind exchange process and see if you are a good candidate.

• 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video – 1031 Exchange Rules of the Road

There are several basic rules of the road when it comes to 1031 exchanges.

• It’s important to remember that partnership interests cannot be exchanged under section 1031 (generally speaking).

• Many people want to cash out and take money off the table in a 1031 exchange. That triggers taxable boot and will invalidate the exchange.

• And then there’s the issue of qualified use in a 1031 exchange. 

Let’s imagine that you exchange your south Minneapolis apartment building and buy an oceanfront condo in Sarasota, FL. You then plan to rent out that property for a number of years. Your initial intent is to hold that property for investment or business purposes (even though your long-term intent may not be clear). How long should you wait before converting that property to personal use? The safest answer is the longer the better.

We have had clients who have moved into their replacement properties and subsequently been audited so this is something you need to be aware of as a possibility.

There are IRS authorities (private letter rulings) that seem to indicate that two years is the standard minimum period of time that you should hold a replacement property before converting to personal use. To be extra careful, it’s a good idea to go longer than that two year minimum if possible.

Consider This Hypothetical:

You move into your Sarasota oceanfront property and then a better property becomes available a few years later. You want to sell that Sarasota property as your principal residence and purchase the new property. There’s another code section (121) that deals with the proceeds from the sale of one’s personal residence. Can you take the full 121 exclusion ($500K if you’re married, $250K if you’re single) on a property that you 1031 exchanged into? You used to be able to do this, but the rules have changed. Now you only get a fraction of the exclusion amount based on the ratio of time you rented the property out and the time you occupied it as your home. Let’s say you rented the property out for two years and then occupied it for another three years. In that situation, you would only get three-fifths of the 121 exclusion. The other thing to be aware of is that you can’t do a 1031 exchange and then do a principal residence exclusion until you wait five years. Once you 1031 into the property you have to wait five years before you take a principal residence exclusion on that particular property. Additionally, the principal residence exclusion does not exclude gain from the recapture of depreciation.

Rather than selling your principal residence and not getting the full exclusion and having to recoup the depreciation, you could elect to continue deferring your capital gains taxes in a 1031 until you die. When you die, your heirs will receive your property with a stepped up basis to the fair market value at the time.

1031 Exchange Company in Minneapolis, MN

CPEC1031, LLC works with real estate investors across the United States on 1031 exchange transactions that help defer capital gains taxes. With more than two decades in the 1031 exchange industry, our qualified intermediaries have the detailed knowledge necessary to ensure your exchange satisfies all the requirements of section 1031 of the Internal Revenue Code. Get the help you need on your next 1031 transaction by contacting our team. You can find us at our primary office located in downtown Minneapolis. Note that we work with clients who own property all over the country.

• 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video – What is Not Considered Like-Kind in a 1031 Exchange?

When you’re thinking about doing a 1031 exchange, there are two parts to the initial litmus test that you must satisfy:

1. The exchange must be for like-kind property.

2. The property involved must be held for a qualifying purpose.

Like-kind generally is very broad. Real estate is generally considered like-kind to other real estate. You can exchange the Empire State Building for a condominium in Naples, FL.

But what are some situations in which real estate may not be considered like-kind?

• Leasehold estates of less than 30 years are not considered like-kind in the realm of 1031. This comes up when dealing with hangars at municipal airports, which are typically on 10 year leases.

• Additionally, certain oil and gas rights are like-kind and some are not. You might need to hire a tax attorney to give you an opinion on whether your specific oil and gas interests qualify for 1031.

Work with a Qualified Intermediary on Your Next Like-Kind Exchange

Work with a qualified intermediary from CPEC1031, LLC on your next like-kind exchange of investment real property. Our team has been facilitating 1031 exchanges across the United States for decades. We can help you with your forward exchange, reverse exchange, or build-to-suit construction exchange. Reach out to us today at our Twin Cities office (located in downtown Minneapolis) to learn more about the tax saving power of section 1031 and see if your property qualifies. Our intermediaries are standing by to discuss your situation.

• 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video – Can I Change My Property Identification After the 45 Day 1031 Exchange Identification Period?

What if you’re using the 3-Property rule in your 1031 exchange and you find a better property after the 45 day identification period has come and gone? Unfortunately, your options are quite limited in this scenario.

The IRS is not going to make you identify properties, limit how many you can identify, and then let you break all those rules and allow you to identify something else.

Perhaps the only situation in which the IRS might allow you to identify a different property after your identification period is if there is a federally declared disaster that directly and adversely impacts your property. In that situation, your identification timeline would be extended and you would be able to change your identification. However, this is extremely rare so you need to be careful about meeting your 1031 exchange deadlines.

Keep Your Money Working For You With a 1031 Exchange

Rather than sell your investment property and realize capital gains taxes, keep your money working for you in a continued 1031 exchange investment property and defer those taxes. Section 1031 is a powerful provision that tax-savvy investors have been using for decades. And you can harness that power too! At CPEC1031, LLC we have more than two decades of experience facilitating like-kind exchanges of all types. We can help you through the entire 1031 exchange process and make sure all the details are covered.

• 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video – How a 1031 Exchange Can Help You Transition Into Retirement

I once talked to a gentleman who was selling real estate intensive business at the end of a decades-long career. He explained to me that if he didn’t do a 1031 exchange he would have nothing to show for his entire 30-year career because between the taxes and the mortgages he still need to pay off, he wasn’t going to have anything left. He needed to keep the taxman at bay and redeploy those dollars without the drag of taxation in order to set up a reliable stream of retirement income. That’s the power of a 1031 exchange. The general idea behind section 1031 of the Internal Revenue Code is you want to keep your money, as well as the money that otherwise would have gone to the state and federal government, working for you in a compounding continued investment.

Consult with a Qualified Intermediary About Your 1031 Exchange

Prior to starting your 1031 exchange, it’s a good idea to consult with a qualified intermediary who can explain the details of the like-kind exchange process and help you plot a course from start to finish. At CPEC1031, LLC our team consists of qualified intermediaries with decades of experience facilitating 1031 transactions across the United States. It doesn’t matter where your property is located – we can help you through the intricate details and make sure you are ready when it comes time to close on your property. Give us a call today to set up a time to chat about your next 1031 exchange.

• 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved