The Biggest Mistakes You Can Make in a 1031 Exchange

Over the past 20+ years in the 1031 exchange industry, we’ve seen taxpayers make a lot of costly mistakes when conducting 1031 exchanges. In this article, we’re going to talk about some of the biggest mistakes you can make when doing a 1031 exchange.

Common 1031 Exchange Mistakes

Here are a few of the more common 1031 exchange mistakes we see taxpayers make:

• Perhaps the most common mistake people make when navigating a 1031 exchange is not establishing a working relationship with a qualified intermediary (QI) before closing on the relinquished property.

• Another major pitfall is failing to follow the strict 45-day and 180-day timelines. It’s important to remember that you only have 180 days total from the start to the finish of your exchange. On top of that, during the first 45 of those days you need to identify your replacement properties.

Pro tip: Always reach out to a qualified intermediary like CPEC1031 first, even when you're just thinking about a 1031 exchange. An intermediary will be able to tell you how to best proceed with your exchange so you have the best chance of deferring 100% of your capital gains taxes.

1031 Exchange Professionals in Minneapolis, MN

The like-kind exchange professionals at CPEC1031, LLC have more than twenty years of experience working on 1031 exchanges in Minnesota and throughout the entire country. Regardless of the details of your like-kind exchange, we can help you through the process from start to finish and make sure you have all the information necessary for the closing table. Our qualified intermediaries are ready and waiting to assist you through the intricate details of your next 1031 exchange. Contact us today to get started with your like-kind 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

Can You Ever “Cash Out” in a 1031 Exchange?

We talk a lot about how you generally want to avoid “cashing out” during a 1031 exchange, but are there any situations in which you can cash out? In this article, we are going to talk about when (if ever) you can cash out in a 1031 exchange.

Cashing Out

In general, you want to avoid cashing out at all costs in a 1031 exchange. When you receive cash during a 1031 exchange, that is considered taxable boot and would prevent you from deferring 100% of your capital gains tax (which is typically the primary reason for conducting a 1031 exchange). You certainly can cash out in a 1031 exchange, but in most cases, you wouldn’t want to.

However, there are some situations in which you may want to consider cashing out.

A Cash Out Strategy

A cash-out strategy involves refinancing your properties in the future or converting them to personal use after holding them for investment or business purposes, then selling them as your primary residence.

Alternatively, you can continually exchange properties through 1031 exchanges and eventually pass them to your heirs tax-free with a stepped-up basis when you die.

Find a Qualified Intermediary for Your Unique 1031 Exchange

Find a qualified intermediary who can handle the unique details of your next 1031 exchange by reaching out to CPEC1031, LLC. We have decades of experience facilitating like-kind exchanges under section 1031 of the Internal Revenue Code. Whether you’re doing a forward exchange, reverse exchange, construction exchange, or something more complex, we are here to help you defer your capital gains taxes. Reach out to our team of Twin Cities 1031 exchange professionals 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

3 Tools to Simplify Your 1031 Exchange

It’s easy to get caught in the weeds while doing a 1031 exchange, and the more you can do to simplify the process, the better. In this article, we are going to outline a few tools that can help simplify your 1031 exchange.

Capital Gains Tax Calculator

This capital gains tax calculator will help you see the amount of capital gains tax you will be able to defer with a 1031 exchange based on information you provide, such as the sale price, depreciation, and purchase price.

1031 Exchange Deadlines Calculator

There are strict deadlines that you must hit in order to defer your capital gains taxes during a 1031 exchange. This deadlines calculator will help you determine your 180 day exchange period dates and the dates of your 45 day identification period.

1031 Exchange Glossary

There are many hyper-specific terms in the realm of 1031 exchange that you may not encounter anywhere else. It’s important to have a basic understanding of these essential terms so that you can keep track of your 1031 exchange as it progresses. To that end, we’ve put together a glossary of terms that will help you better understand your 1031 exchange.

Defer Your Taxes Under Section 1031

Defer your capital gains taxes when selling investment real estate under section 1031 of the Internal Revenue Code! This powerful tax provision is available for all United States taxpayers to use. However, in order to defer 100% of your capital gains taxes, you need to make sure you are abiding by the rules that govern section 1031. That’s where a qualified intermediary can be invaluable. A good intermediary can help you understand the rules and regulations and make sure you are with within the 1031 exchange strike zone. Contact the skilled intermediaries at CPEC1031, LLC today to learn more about how we can help you through the 1031 exchange process.

• 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 – Delaware Statutory Trusts & 1031 Exchanges

Delaware Statutory Trust investments are not typically sold by real estate agents or brokers. These products are typically marketed and sold through financial services firms. DSTs are also regulated as securities, which means they can’t be sold to just anyone. The purchaser has to be an “accredited investor” – which means they need to do some due diligence to make sure they have enough net worth to be considered accredited. One of the advantages of buying a DST is that it is truly a passive investment. It’s under management from your financial services firm and it’s more akin to buying a stock or a mutual fund than any other real estate product.

1031 Exchange Specialists in Minnesota

At CPEC1031, LLC we do everything possible to simplify the like-kind exchange process. With decades of experience in the industry, you can rest easy knowing your 1031 exchange is in good hands. Our team can handle the long list of details needed during a 1031 exchange and make sure you have all the information and documentation you need for the closing table and beyond. Contact CPEC1031, LLC today to learn more about the benefits of section 1031, the services we offer, and how we can help you defer capital gains taxes on your next 1031 exchange of 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Can 1031 Exchanges Only Be Conducted by Individual Taxpayers?

While section 1031 is available for use by any United States taxpayer, there are some rules and guidelines in place that govern how 1031 exchanges are conducted. In this article, we are going to talk about what types of entities can conduct 1031 exchanges and how it can be beneficial from a tax perspective.

1031 Exchanges Involving Individual Taxpayers

1031 exchanges are often conducted by individual taxpayers who own investment property (such as a duplex, retail space, farmland, etc.) We work with a lot of individual taxpayers who want to defer taxes when selling their investment property by reinvesting into like-kind replacement property.

1031 Exchanges Involving Other Entities

While 1031 exchanges are often conducted by individual taxpayers, there are many types of entities that can utilize section 1031 for tax deferral. Trusts, LLCs, and corporations can also exchange property under section 1031 of the Internal Revenue Code. The 1031 exchange is a powerful tax-saving tool for business owners and investors alike.

Defer Your Taxes with a Like-Kind Exchange of Real Estate

Defer your capital gains taxes with a like-kind exchange of investment real estate. Section 1031 of the Internal Revenue Code was created to incentivize reinvestment and stimulate the economy. The best part is it’s available for all United States taxpayers to utilize! If you own investment or business property and you’re looking to sell, consider a 1031 exchange to defer your capital gains taxes on the sale. Reach out to the qualified intermediaries at CPEC1031, LLC to learn more about the like-kind exchange process and see how our team 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