Video – A Historical Timeline of Section 1031

Here’s a brief history of the 1031 exchange.

The section 1031 provision and its predecessors have been in the code for over 100 years. Since 1921, there’s been a version of section 1031 that allows for the tax-deferred exchange of property. The rationale for giving you a pass on triggering the recognition of the gain is that you’re not cashing out. If you’re continuing your investment into other like-kind property, you’re able to defer your capital gains tax burden. The government allows you to do that, in part, because they want to stimulate economic growth. They don’t want you to be locked into your property. When real estate transactions are happening, bankers are making more loans, real estate agents are making more commissions, title companies are doing more closings, and more.

In 1979, a critical event in the world of 1031 exchanges occurred. A lumber baron named T. J. Starker broke the mold on 1031 exchanges. Prior to Starker, it was assumed that all exchanges needed to be simultaneous. Starker opted to give up his lumber holdings in Oregon in exchange for some properties that would be determined later. Basically, he did the first legal non-simultaneous exchange. That blew the IRS’s mind and they litigated it all the way to the Supreme Court, where Starker won. Today, nearly all 1031 exchanges are done in the mold of Starker’s non-simultaneous exchange.

In the 1980s-1990s, the IRS got Congress to authorize the Treasury to write their own regulations regarding 1031 exchanges. These rules were written to limit the number of people conducting 1031 exchanges. They introduced the 180 day deadline, as well as the 45 day identification period.

When the IRS came out with the initial regulations for forward exchanges in 1991 they didn’t outline specifics for reverse 1031 exchanges. Then in the year 2000, rev. proc. 237 was issued on how to do safe harbor reverse exchanges.

In 2018 the Tax Cuts and Jobs Act limited 1031 exchange property to real estate and eliminated the use of personal property.

Find a Qualified Intermediary for Your Next 1031 Exchange of Real Estate

Find a qualified intermediary for your next 1031 exchange of real estate by contacting CPEC1031, LLC today. We have more than two decades of experience working on 1031 exchanges of all shapes and sizes. We are well equipped to handle all the unique details of your next like-kind exchange under section 1031 of the Internal Revenue Code. Whether your doing a forward exchange, reverse exchange, or something in between, our qualified intermediaries are ready and waiting to help ensure you defer 100% of your capital gains tax burden.

• 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 – Assembling Your 1031 Exchange Team

When you’re doing a 1031 exchange, you cannot expect your qualified intermediary to do absolutely everything for you during the process. There are other professional advisors that are there to help you do other things. This is why you need to assemble a 1031 exchange team to help you through the process.

For example, you need to have a good title company to do the property closings and put the window dressing on the settlement statements to articulate what’s going on with the exchange.

Another part of your team is your real estate agent, who can help facilitate the smooth transition of your property. When you negotiate the purchase and sale agreements, we often suggest that you include a strong cooperation clause in the contract that explains you are conducting a 1031 exchange. If you don’t have this provision in your contract, the buyer may use that as an opportunity to try to get a concession.

You also need an accountant. At the end of the 1031 exchange process, you need to submit form 8824 to the IRS. This is not an easy worksheet to fill out, particularly when you are dealing with multiple relinquished properties. Your accountant is going to report how the puzzle pieces fit together to form your 1031 exchange. The IRS is going to know that you sold a relinquished property because when you dispose of a relinquished property, the title company closing the transaction must ping the IRS with a 1099-S. Form 8824 connects the dots between the property that was sold and the property that was purchased.

Your banker also plays an integral role in a 1031 exchange. If you’re trying to lever up with your 1031 exchange, having a nimble, creative banker can be very helpful. A good banker can help ensure that you’re redeploying all of your equity in a 1031 exchange. You do not want there to be a settlement statement that shows cash to buyer because that would result in you receiving taxable boot.

Having an attorney that understands the ins and outs of a 1031 exchange is incredibly important. It’s essential to have someone to provide counsel throughout the exchange process.

Finally, it’s important to work with a qualified intermediary who can prepare the paperwork and conduct the 1031 exchange itself. A qualified intermediary is authorized under the Treasury Regulations and is the only person on your 1031 exchange team who is not deemed to be the agent of the taxpayer conducting the exchange. This is important because your qualified intermediary cannot be a related party. They must be a neutral and unbeholden party to the taxpayer.

1031 Exchanges for Capital Gains Tax Deferral

A 1031 exchange is the quickest way to capital gains tax deferral when selling qualifying real estate. Learn more about the tax-saving benefits of section 1031 of the Internal Revenue Code by contacting the team of qualified intermediaries at CPEC1031, LLC. With more than twenty years of experience, we can guide you through each stage of the 1031 exchange process, making sure you have all your bases covered. Contact us today at our Twin Cities office, which is located in downtown Minneapolis and get your 1031 exchange up and running!

• 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

1031 Exchange Deadlines & Your Federal Tax Filing

In any 1031 exchange, you have 180 days from the start of your exchange to the finish of your exchange. However, this can get complicated by your federal income tax filing deadline.

If you start your 1031 exchange late in the year, you will find that your exchange period actually ends not at the 180th day after starting your exchange, but at the due date for the filing of your federal tax return. Let’s say you started your exchange on December 31st and you’re a partnership that files taxes on March 15th. In this situation you’re not going to get the full 180 day time period to complete your exchange unless you file an extension for your federal tax return. The same thing applies to individuals who file on April 15th. This is a real trap for the unwary.

I tell real estate agents to notify the other professionals that are in the client’s sphere (including the accountant) to let them know about the 1031 exchange so they can file for an extension if need be. The left hand and the right hand need to be working together and the advisors of the 1031 taxpayer need to be in lockstep throughout the process.

Minnesota 1031 Exchange Company

CPEC1031, LLC is a Minnesota-based 1031 exchange company that provides qualified intermediary services throughout the state and across the country. Our team of 1031 professionals has more than twenty years of experience working with taxpayers on their 1031 exchanges. We can help prepare your 1031 documents and answer all of your 1031-related questions before, during, and after the process. Contact us today to learn more about our 1031 exchange services and see how we can help you through the details of your next 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

Video – Can I do a 1031 Exchange with Foreign Real Estate?

You can do a 1031 exchange of US property for US property. You cannot do a 1031 exchange of foreign property for US property. Strangely you can also do a 1031 exchange of foreign property for foreign property. Let’s say that you own commercial real estate property in New Zealand, and you want to sell that property and purchase a new property in Australia. You can do a 1031 exchange with those properties. You might ask, “why would I bother doing a 1031 exchange in this situation?”

Remember, US taxpayers are taxed on their income regardless of where it’s derived. Even if your income is derived from a foreign real estate transaction, you must pay taxes on that transaction in the United States. A 1031 exchange can help you defer those taxes.

Defer Your Capital Gains Taxes by Reinvesting Your Proceeds

A 1031 exchange under section 1031 of the IRC allows you to defer capital gains taxes by reinvesting the sales proceeds into a like-kind replacement property of equal or greater value. This is an extremely powerful tax tool used by big and small investors alike! Anyone can avail themselves of the tax-saving benefits of the 1031 exchange. To get your exchange rolling, contact a qualified intermediary at CPEC1031, LLC today. We can explain the like-kind exchange process to you, answer any of your questions, and guide you through each stage.

• 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 If My Replacement Property Costs Less Than My Relinquished Property?

If your 1031 exchange relinquished property closed for $1 million, in total all your replacement properties should be at least $1 million if you want to defer all of your capital gains taxes. If your replacement property is worth $900K, you’re going to recognize gains on that $100,000 buy down in value. In this scenario, you could purchase one replacement property for $900K, and a second replacement property for $110K. Between the two of those properties, you have a greater value than your relinquished property and would be able to defer your capital gains taxes in a 1031 exchange.

This is where a DST can be used as a sort of “gap filler” because you can tailor that purchase to fit your needs. If it’s a leveraged DST, you’re not paying a dollar for every dollar of value – you’re getting some credit for the underlying debt. As a result, you may be paying out less than you would pay out in taxes on the boot if you were to buy down. If you buy an 85% leveraged DST, that’s only going to cost you 15 cents on the dollar to make up that gap. But the effective taxes on a $100K buy down might be almost 50%. What would you rather do – give 50 cents on the dollar to the state of Minnesota and federal government, or instead give 15 cents on the dollar to your stock broker who is going to put that money in a security that might be worth something some day? The money that you pay out in taxes will never come back to you. The money that you give to your stock broker to put in a DST probably will.

CPEC1031, LLC – An Experienced 1031 Exchange Company

CPEC1031, LLC is an experienced 1031 exchange company with decades of time working in the 1031 exchange industry. Our team facilitated like-kind exchange transactions in Minnesota where we are based, and across the entire United States. No matter where your 1031 property is located, we can assist you in deferring your capital gains taxes. Reach out to our team of 1031 exchange professionals today to see how we can help you through the many details of your next 1031 exchange. We are located in the heart of 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved