When it comes to selling investment real estate, you have a few options at your disposal. You can choose to do a straight-forward sale of the property and pay capital gains taxes on the sales proceeds. Or you can do a 1031 exchange and defer payment on those capital gains taxes. In this article, we’re going to talk about when to choose each of these options.
When to Pay Capital Gains Taxes
There are certain situations in which you may want to pay capital gains taxes when selling investment real estate. If you are in dire need of cash, you may just want to pocket the sales proceeds and pay the corresponding capital gains taxes. It’s important to remember that if you choose to do a 1031 exchange, you cannot touch any of the cash proceeds from the sale. Rather, you need to reinvest those proceeds into a replacement property.
When to Defer Capital Gains Taxes with a 1031 Exchange
The more tax-savvy approach to selling investment real estate is to do a 1031 exchange. When you exchange your property and re-invest your net proceeds into a like-kind replacement property, you can defer up to 100% of your capital gains tax burden. This allows your hard-earned money to continue building and compounding in a bigger, better replacement property. Tax-savvy investors have been using the 1031 exchange for decades and you can too!
Reach Out to a Qualified Intermediary at CPEC1031, LLC
Don’t try to handle all the details of your 1031 exchange alone. Reach out to a qualified intermediary at CPEC1031, LLC who can manage the specifics of your exchange so you can rest easy. The 1031 exchange process can be tricky. Unexperienced investors may find themselves at the end of an unexpected tax bill if they don’t abide by the strict 1031 exchange rules and requirements. A qualified intermediary can help ensure you meet all the necessary criteria for a 100% tax-deferred like-kind exchange. Contact CPEC1031, LLC at our downtown Minneapolis office 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.
© 2026 Copyright Jeffrey R. Peterson All Rights Reserved