In the realm of 1031 exchanges, knowledge is power. In this article, we are going to outline a few things a qualified intermediary wants you to know before beginning a 1031 exchange.
100% Tax Deferral is the Ultimate Goal
The greatest benefit of a 1031 exchange is that it offers an opportunity to defer 100% of your capital gains taxes on the sale of like-kind property held for investment or business purposes. 100% capital gains tax deferral is the ultimate goal in most 1031 exchanges. However, if you fail to meet the various requirements for full tax deferral, you can still partially defer your capital gains taxes.
There are Multiple Types of 1031 Exchanges
Many people aren’t aware that there are actually several different types of 1031 exchanges, each with their own purpose. There’s the standard forward exchange that most people think of when they hear about section 1031. There’s also the reverse exchange, which allows you to lock down a replacement property first before selling your relinquished property. And finally, there’s the build-to-suit exchange, during which you can construct improvements to your 1031 property as a part of the process.
Preparation is Key
Preparation is your greatest ally in a 1031 exchange, but many taxpayers don’t give themselves enough time before starting their exchange to fully prepare. Nobody wants to be scrambling to find a suitable replacement property at the last minute. Give yourself plenty of lead time and reach out to a qualified intermediary early on in the process to set yourself up for a successful 1031 exchange.
CPEC1031, LLC – Your 1031 Exchange Resource
CPEC1031, LLC has been facilitating 1031 exchanges in Minnesota and across the United States for more than two decades. We have extensive experience working on forward exchanges, reverse exchanges, build-to-suit exchanges, and everything in between. If you are curious about how the 1031 exchange process works, don’t hesitate to reach out to our team of qualified intermediaries. We can help you determine if your property is well-suited for 1031 exchange. Contact us at our Minneapolis office today to set up a time to chat.
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.
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