How to Defer Taxes When Selling Real Estate

 Real Estate Taxes

When you sell a piece of real estate, you hope to make as much profit as possible. But with the capital gains taxes assessed on the sale, you may end up owing more than anticipated. A high capital gains tax bill may even be enough to dissuade you from selling your property. A 1031 exchange can solve many of these problems for you. In this article, we are going to talk about how a 1031 exchange can help you defer capital gains taxes when selling real estate.

Using a 1031 Exchange to Defer Taxes

A 1031 exchange is a great tool you have at your disposal to defer taxes on the sale of real estate. How, you ask? Instead of selling your property outright, taking the net proceeds, and paying the required capital gains taxes, you can reinvest your net proceeds into a like-kind replacement property. This is the 1031 exchange in a nutshell. No, you don’t get to pocket the sales proceeds, but you do get to defer a potentially huge capital gains tax hit. As an added bonus, you get to keep your money working for you in a continued investment property.

Capital Gains Tax Deferral

Capital gains taxes can really add up when selling real estate. Why not defer those taxes and keep your money working for you in a continued investment? That’s what a 1031 exchange allows you to do.  Reach out to the qualified intermediaries at Commercial Partners Exchange Company to learn more about the benefits of a 1031 exchange and to see if your property is a good fit. Our main office is located in downtown Minneapolis, but we work with clients throughout the state of Minnesota, and around 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

 

How to Pay Your Legal Fees in a 1031 Exchange

 Legal Fees in 1031 Exchanges

When engaging in a 1031 exchange, there are numerous fees you need to keep track of and rules that govern how you can pay these fees. Many taxpayers have questions about how to pay their legal fees in a 1031 exchange. That’s our topic for this article. We’ll discuss how to pay your legal fees and the various rules surrounding legal fees in a like-kind exchange.

Paying Fees with the 1031 Proceeds

Paying fees with the net proceeds from the sale of your relinquished property is a little tricky. You can only use these funds to pay for customary transactional expenses. Legal fees directly related to the exchange of your property would likely fall into this category. However, any unrelated legal fees should not be paid with these net proceeds. By way of an example, if you did some estate planning work in conjunction with your 1031 exchange, these fees would not count as related fees and should not be paid with the sales proceeds.

When in doubt, it’s always a good practice to simply pay associated fees with cash at closing. If you have any questions, a qualified intermediary can help you navigate the rules and regulations.

Questions About Your 1031 Exchange?

If you have questions about your 1031 exchange, don’t hesitate to reach out to us at Commercial Partners Exchange Company. Our qualified intermediaries have been helping clients with their exchanges of real property for the past two decades. We can get all of your documents prepared and guide you through every stage of the like-kind exchange process. Contact us today at our downtown Minneapolis office, or one of our other offices across the country. We are ready and able to help ensure your 1031 exchange is a success!

  •  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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

 

How to Fund an Escrow in a 1031 Exchange

 Escrow in 1031 Exchanges

Escrow is a confusing topic for many taxpayers – especially those contemplating a 1031 exchange of real estate. Many people we work with have questions about the rules surrounding escrow accounts in a 1031 exchange. In this article, we are going to offer up a few tips for funding escrow in a 1031 exchange.

Sales Proceeds

One of the most common questions we hear when it comes to escrow accounts and 1031 exchanges is – “can I fund my escrow account with my 1031 exchange sales proceeds from my relinquished property?” This is an excellent question that many people run into during a like-kind exchange.

If you use any of your net proceeds to fund an escrow account, that will likely be considered taxable boot and your 1031 exchange will not be 100% deferred. The best course of action is to fund your escrow account with cash that you bring to the closing table. This will keep everything separate and allow you to defer all you’re your capital gains taxes.

1031 Exchange Services in the United States

Consult with a qualified intermediary about your 1031 exchange today if you are considering a like-kind exchange of property. Working with an intermediary as early in the process as possible is essential to the success of an exchange. We make everything as easy as possible for you by preparing your documents and answering your questions. Give us a ring today to learn more about how we handle exchanges and to get your exchange of real estate started! We provide 1031 exchange services to clients throughout 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

 

How to Extend Your 1031 Exchange Period

 1031 Exchange Period Extension

1031 exchanges of real estate are governed by pretty strict rules about the type of property that can be exchanged, the amount of time a taxpayer has to complete their exchange, and more. But are these rules always hard and fast, or are there exceptions? In this article, we are going to discuss the ways in which you can extend your 1031 exchange period past the standard 180 day deadline.

Standard Time Periods in a 1031 Exchange

In any typical 1031 exchange, the time periods are pretty much set in stone. You have 180 days in total to complete your 1031 exchange (with the first 45 of those days being set aside for identification of your replacement property). Generally, if you miss this deadline, your exchange will fail. But there are a few exceptions to the rule.

Federally Declared Disasters

If your property is in a location that has been declared as a disaster area by the Federal Government (due to a hurricane, flooding, or other natural disaster), you can get an extension on your exchange deadline. This extension is typically 120 days. Be sure to discuss your situation with your CPA to make sure you are eligible for the extension.

Defer Your Tax, Maximize Your Gain!

Get your 1031 exchange off the ground today and start deferring your capital gains taxes on the sale of real estate. The like-kind exchange process can be complicated, but our intermediaries are here to simplify things as much as possible for you. Give our 1031 exchange professionals a call today to learn more about the process and how we work. Our primary office is located in Minneapolis, but we work with clients throughout 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

What to Do When Replacement Property Competition is High

 Replacement Property Competition

So you’re in the process of exchanging your property in a 1031 transaction, but competition is high for the replacement properties you’re looking at. What can you do? In this article, we are going to discuss what to do when competition for replacement property is high during your 1031 exchange.

Consider a Reverse Exchange

If you haven’t yet sold your relinquished property, you may be able to do a reverse 1031 exchange in which you first purchase your replacement property before selling your relinquished property. This allows a taxpayer to snatch up a replacement property before another motivated buyer and then sell their relinquished property in a subsequent transaction – all while deferring their capital gains taxes.

Work with a Qualified Intermediary

Working with a qualified intermediary is a great way to find suitable replacement property for your transaction. Your intermediary can walk you through the process step-by-step, explain to you the requirements for identifying replacement property, and even help you find specific properties that fit your needs.

Find Your Replacement Property

If you need help finding the right replacement property for your 1031 exchange, contact the like-kind exchange professionals at Commercial Partners Exchange Company today. Our qualified intermediaries have over two decades of experience working with clients on their 1031 exchanges of real estate. We have the necessary skills to help you identify replacement property, prepare your documents, and answer all of your questions along the way. Contact us today at our downtown Minneapolis office to learn more about the services we provide and to get started with your 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved