The True Power of the 1031 Exchange

1031 Exchange Power

The 1031 exchange is an incredibly powerful tool for deferring capital gains taxes on the sale of real estate. But many taxpayers are unaware of its true power. In this article, we are going to explain the true power of section 1031 of the Internal Revenue Code and how you can harness that power to save money on taxes when selling real estate.

How a 1031 Exchange Works

In a typical real estate sale, you sell a piece of property and then have to pay capital gains taxes on the sale. A 1031 exchange allows you to defer these capital gains taxes by reinvesting your net proceeds into a new replacement property.

How to Harness the Power of a 1031 Exchange

So how can you harness the tax-saving power of a 1031 exchange? Simple. Any United States taxpayer is eligible to sell property under section 1031. You just need to ensure that your property meets the required use guidelines (i.e. it’s held for investment use) and be sure to meet all the exchange deadlines. If you do everything correctly, you’ll save yourself a huge capital gains tax bill and keep your money working for you in a continued investment.

Feel the Power of the 1031 Exchange

If you’re ready to feel the true power of the 1031 exchange, contact Commercial Partners Exchange Company today. Our qualified intermediaries have over twenty years of experience facilitating exchanges of all shapes and sizes. We work with clients in the Twin Cities metro area, as well as the greater United States. Contact us today at our primary office located in downtown Minneapolis, or one of our satellite offices located around the country. Let us help you get your 1031 exchange up and running today!

  • 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.

 

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

 

Why It’s Important to Work with a Company that Specializes in 1031 Exchanges

1031 Exchange Specialist

At Commercial Partners Exchange Company, we help clients through their 1031 exchanges. And that’s all we do. Rather than dabbling in a lot of different real estate services, we focus all of our efforts on 1031 exchanges – which makes us uniquely qualified to facilitate exchanges of all shapes and sizes. In this article, we’re going to talk about the importance of working with a company that specializes in 1031 exchanges.

Expertise

With a company that focuses specifically on 1031 exchanges, you are getting an unparalleled level of expertise. A company that does a few exchanges per year is not going to have the depth or breadth of knowledge on 1031 exchanges as a company that focuses solely on 1031 exchanges.

Personalized Service

We provide personalized service to each of our clients and get to know the specific details of your unique exchange. This allows us to provide the best possible service to our clients – regardless of the details of your exchange.

Commercial Partners Exchange Company Specializes in 1031 Exchanges

At Commercial Partners Exchange Company, we specialize in facilitating 1031 exchanges of real estate for taxpayers throughout the state of Minnesota and across the United States. Our qualified intermediaries can help you through each and every stage of the 1031 exchange process – and make sure you are fully prepared when it comes time to close. Contact us today to learn more about our services and how we can help you set up your next 1031 exchange transaction. You can find us at our offices in downtown Minneapolis.

  • 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.

 

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

Are You Missing Out on a Tax-Saving Real Estate Strategy?

Tax-Saving Real Estate Strategy

Selling a piece of real estate is often a daunting task – with a lot of variables to consider throughout the process. But a lot of taxpayers aren’t aware of the full range of options available to them when it comes to selling real estate. In this article, we are going to talk about some tax-saving real estate strategies – specifically the 1031 exchange – that you can use to your benefit when selling real property.

Selling vs. Exchanging

The most obvious way to sell real estate is to engage in a straight-forward sale. In this situation, the owner sells the property and receives the net proceeds from the sale. What many taxpayers don’t consider is the potential capital gains tax bill from such a sale. Those sales proceeds do not all go into your pocket – you have to pay potentially hefty capital gains taxes on them. This can result in an unexpected tax bill, and even dissuade some taxpayers from selling.

If that sounds like you, a 1031 exchange may be right up your alley! With a 1031 exchange, you get to defer your capital gains taxes on the sale of real estate. The catch is that you have to reinvest those net proceeds into a replacement property. The benefit is that you get to defer a potentially huge capital gains tax bill.

Save on Taxes with a 1031 Exchange!

Selling a piece of investment real estate in the near future? Consider the tax-saving benefits of a 1031 exchange! The qualified intermediaries at Commercial Partners Exchange Company can help you through all the details of your 1031 exchange. Contact us today to learn more about the 1031 exchange process and how we can help you save tax dollars on your next real estate sale! Our primary office is located in downtown Minneapolis, but we work with clients 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.

 

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Replacement Property Considerations from an Accounting Perspective

1031 Exchange Accounting

In a previous article, we talked about how you are not required to purchase all the replacement properties you identify. That being said, there are some accounting considerations you need to take into account when determining which properties to identify and purchase.

Purchasing Replacement Properties

From an accounting perspective you may want to purchase replacement properties that in total are of equal of greater value (and equity) than the property that you relinquished, but that is not really an identification requirement, some much as a general concept for calculating the extent of tax deferral/recognition by continuing your investment. This is because there can be both deferred and recognized gain in the same transaction when a taxpayer exchanges and receives replacement property of lesser value.

Only those properties that are properly designated or identified will be considered “Like-Kind” for purposes of Section 1031.

An exchange can include like-kind property exclusively, or it may also include like-kind property along with cash, liabilities and other property that are not like-kind. If you receive cash, relief from debt, or other property that is not like-kind, than you may trigger some recognition or taxable gain in the year of the exchange. It is important to work with your CPA or tax advisor to make sure you are completing your exchange correctly.

1031 Exchanges – a Win-Win Scenario

For many taxpayers selling investment property, a 1031 exchange is the most tax-advantageous method for selling property. When constructed correctly, a like-kind exchange will allow you to defer all of your capital gains taxes – which would have otherwise gone to the government – and instead reinvest those proceeds into a new replacement property. This results in a win-win for both the taxpayer and the economy as a whole. At Commercial Partners Exchange Company, we have decades of experience facilitating exchanges and can help you put together a like-kind exchange to fit your needs. Contact us today to learn more!

  • 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.

 

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

How to Designate & Purchase Replacement Property in a 1031 Exchange

Designate Replacement Property

In this article, we are going to briefly outline the rules that govern identifying and purchasing replacement property in a 1031 exchange.

Designating & Purchasing Replacement Properties

You are not required under the identification rules to purchase all of the replacement properties that you designate.

The 1031 proceeds of the sale must be re-invested in a like kind asset within 180 days of the sale. Restrictions are imposed on the number of properties which can be identified as potential Replacement Properties. More than one potential replacement property can be identified as long as you satisfy one of these ALTERNATIVE rules:

  • The Three-Property Rule - Up to three properties regardless of their market values. All identified properties are not required to be purchased to satisfy the exchange; only the amount needed to satisfy the value requirement.

  • The 200% Rule - Any number of properties as long as the aggregate fair market value of all replacement properties does not exceed 200% of the aggregate Fair Market Value (FMV) of all of the relinquished properties as of the initial transfer date. All identified properties are not required to be purchased to satisfy the exchange; only the amount needed to satisfy the value requirement.

  • The 95% Exception - Any number of replacement properties if the fair market value of the properties actually received by the end of the exchange period is at least 95% of the aggregate FMV of all the potential replacement properties identified. In other words, 95% (or all) of the properties identified must be purchased or the entire exchange is invalid.

NOTE: The replacement property received must be substantially the same as property identified within the 45-day limit described above.

  • 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.

 

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved