Why 1031 Exchanges of Real Estate are Great for the Economy

1031 Exchanges Economy

1031 exchanges of real estate are beneficial for the taxpayer conducting the exchange, as well as the economy as a whole. But many people may not understand why that’s the case. In this article, we are going to explain why 1031 exchanges of real estate benefit the economy.

Encouraging Investment

First and foremost, 1031 exchanges encourage investment in real estate. The ability for taxpayers to defer their capital gains taxes makes re-investing very attractive. Selling a piece of real estate can result in a hefty tax bill on the capital gains from the sale. A 1031 exchange allows taxpayers to defer that tax burden, and continue their investment in another property.

Consider the situation from the perspective of an investor. If the 1031 exchange did not exist and you were required to pay your capital gains taxes, you may hesitate to sell your property. But by doing a 1031 exchange, you can avoid a tax hit with the incentive of reinvesting your funds in bigger, better property. This keeps money moving around the market and stimulates growth!

Real Estate Exchanges in Minnesota

At Commercial Partners Exchange Company, we work with taxpayers large and small in numerous industries to facilitate the like-kind exchange of real estate under Section 1031. A 1031 exchange can save you a lot of money in capital gains taxes when you’re selling real estate. It allows you to keep your money working for you in a continued investment. Contact our qualified intermediaries today to see if you are a good candidate for a 1031 real estate exchange. We have decades of experience advising clients through every step of the 1031 exchange process.

  • 1031 Hotline: If you have questions about 1031 exchanges of real estate, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

Should I do a 1031 Exchange in 2018?

1031 Exchange in 2018

Section 1031 of the Internal Revenue Code has been around for many decades and taxpayers have been availing themselves of the benefits of the 1031 exchange for just as long. But with the recent tax law, many people want to know if 2018 is a good year to conduct a 1031 exchange. In this article, we’re going to discuss whether or not it’s a good time to do a 1031 real estate exchange in 2018.

Conducting a 1031 Exchange in 2018

Whether or not you should do a 1031 exchange is heavily dependent on your particular situation, property, and goals. It’s always a good idea to discuss the potential of exchanging your property with a qualified intermediary to determine if you are a good candidate.

That being said, 2018 is a great year to conduct a 1031 exchange! The new tax law that went into effect earlier this month preserves the like-kind exchange. Some taxpayers were worried that the new bill would eliminate the 1031 exchange. Thankfully, that did not happen. As a result, investors big and small can continue to reap the benefits of the 1031 exchange when selling real estate.

Like-Kind Real Estate Exchange Company

If you’re thinking of selling real estate, but are concerned about the capital gains taxes of the sale, a 1031 exchange may be the best option for you! By moving all of your net proceeds into a new replacement property, a like-kind exchange allows you to defer your capital gains taxes and keep your money compounding and building over time. At Commercial Partners Exchange Company, our qualified intermediaries have been assisting clients with like-kind exchanges for decades. Contact us today to see if a 1031 exchange is right for you!

  • 1031 Hotline: If you have questions about 1031 exchanges in 2018, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

Can I do a 1031 Exchange of Bitcoin & Cryptocurrency?

Bitcoin Exchanges

Bitcoin and cryptocurrency is still in its infancy. As a result, many investors and regulators are still wrapping their heads around the concept and how to deal with it. Many investors have been using section 1031 of the IRC to defer their taxes on the sale of cryptocurrency – leading many to question the validity of such transactions. This article is focused on 1031 exchanges of bitcoin and other cryptocurrencies.

Bitcoin Exchanges

So are 1031 exchanges of bitcoin allowed? In short, no. The new tax bill that was recently signed into law and became effective on January 1, 2018 restricts like kind exchanges to real property. All items of personal property (including bitcoin and other cryptocurrencies) are excluded from 1031 exchange tax deferral.

That being said, 1031 exchanges are still valid for real estate. If you want to defer the capital gains taxes on the sale of real estate, don’t hesitate to speak with a qualified intermediary about your situation.

1031 Exchange Company in MN

Like-kind exchanges under section 1031 of the IRC can save taxpayers vast sums of money that would otherwise be taxed. The purpose of section 1031 is to stimulate the economy by allowing investors to defer their capital gains taxes on the sale of real estate, so long as they move those net proceeds into other like-kind investment property. 1031 exchanges are available to all American taxpayers. Give our qualified intermediaries a call today to discuss your 1031 exchange of real estate.

  • 1031 Hotline: If you have questions about 1031 exchanges and bitcoin, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

3 Benefits of a Like-Kind Exchange

Like-Kind Exchange Benefits

There are many benefits of performing a like-kind exchange of real estate instead of selling your property in a typical transaction. In this article, we’re going to offer three benefits of deferring taxes with a like-kind exchange of real estate.

Avoid a Tax Windfall

The most obvious benefit of conducting a like-kind exchange of real estate is the ability to defer your taxes on the sale of real estate. In a typical real estate sale, the seller has to pay capital gains taxes on the net proceeds from the sale. In a 1031 exchange, you can defer those capital gains taxes and avoid a huge tax windfall. To do this you must move all of your net proceeds into new replacement property. In doing so, you avoid a tax hit and keep your money compounding wealth over time.

Diversify your Real Estate Portfolio

1031 exchanges are also a great way to diversify a real estate portfolio into different asset classes, alternative market segments, and geographical areas.

Selling Vacation Homes

Vacation homes can also be exchanged in 1031 exchange transactions. That being said, there are some additional restrictions on 1031 exchanges of vacation homes. For more information on 1031 exchanges of vacation homes, check out this article.

MN Qualified Intermediary

At Commercial Partners Exchange Company, our MN qualified intermediaries have decades of experience facilitating real estate exchanges for clients large and small. 1031 exchanges are complex. You need an intermediary on your team who can simplify the process for you. Our intermediaries will prepare all of your 1031 documents, advise you on replacement property, and answer all of your questions along the way. Contact us today to discuss the details of your like-kind exchange and how you can defer your taxes and maximize your gain.

  • 1031 Hotline: 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

The Many Functions of the QI in a 1031 Exchange

Qualified Intermediary Role in a 1031 Exchange

A qualified intermediary has many tasks and responsibilities in a 1031 exchange, but many taxpayers don’t know exactly what a QI does. This article examines the many functions of the qualified intermediary in a 1031 exchange of real estate.

Constructive Receipt Insulation

In any 1031 exchange, the exchangor needs to move all of their net proceeds from the sale of the relinquished property into the new replacement property. If they receive any of those proceeds (“constructive receipt”) the exchange will not be fully tax-deferred and they will be required to pay taxes on those funds. A qualified intermediary acts as an insulator between the exchangor and their exchange funds. The QI holds the exchangor’s net proceeds during the exchange process in a segregated account until such time as they are ready to move the proceeds into the new property. This keeps the funds safe, and also protects the taxpayer from receiving any funds before the exchange is complete.

Simplifying a Complex Process

1031 exchanges are complicated. Qualified intermediaries make the process easy for exchangors by explaining the procedure, answering questions, and facilitating all aspects of the transaction.

Document Preparation

There are many documents involved in a 1031 exchange – the necessary closing documents, written exchange agreement, and more. A qualified intermediary can help draft all these documents for you so you are fully prepared for your closing.

Minnesota Qualified Intermediary Services

At Commercial Partners Exchange Company, we offer qualified intermediary services to taxpayers large and small. If you’re considering a 1031 exchange of real property, contact us today to discuss the details surrounding your exchange. Our qualified intermediaries have decades of experience and can answer all of your questions, prepare your 1031 documents, and advise you on the best practices regarding your exchange. 1031 exchanges offer a great method for deferring capital gains taxes. See if your property qualifies today!

  • 1031 Hotline: If you have questions about 1031 exchanges and qualified intermediaries, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved