RSVP Now for a FREE 1031 Exchange Workshop on 11/13/25

Join us for a FREE 1031 Exchange Workshop on 11/13/25 - Basic to Complex Real Estate Transactions & More!

You'll walk away with a solid understanding of:

• How 1031 Exchanges work and why they matter

• Key rules, timelines, and types of exchanges

• Real-life examples and common pitfalls

• What doesn't qualify and how to problem-solve

• Drop & Swaps, Reverse Exchanges, TICs, DSTs

• Bonus: Cost Seg, Bonus Depreciation, OZs & more!

Perfect for real estate agents, real estate attorneys, financial advisors, and commercial brokers looking to better serve investor clients. Event details:

• When: November 13, 2025, 9:00 AM - 11:00 AM (Check-in, Networking & Complimentary Breakfast at 9:00 AM. Session starts at 9:30 AM)

• Where: CliftonLarsonAllen, 10401 W Innovation Dr Ste 300, Wauwatosa, WI 53226

Space is limited. Click on the link below to RSVP and secure your spot!

• 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

Pre-Exchange Refinancing: A Hidden Trap in the 1031 Exchange Process

A common pitfall in 1031 exchanges arises when investors attempt to pull cash out of their properties right before or during a 1031 exchange. The IRS often views these maneuvers as the equivalent of “taking boot.”

• One scenario is pre-exchange cash-out refinancing on the relinquished property:
  If you refinance your relinquished property just before selling it, that refinancing can look like you are receiving proceeds from the exchange. In other words, it may be treated as taxable boot. The IRS has recognized limited exceptions in cases where the refinancing was truly unrelated to the exchange (for example, Fredericks v. Commissioner, T.C. Memo 1994-27 and Garcia v. Commissioner, 80 T.C. 491 (1983), Acq., 1984-1 C.B. 1). But in general, a refinance in anticipation of the exchange, especially right before closing, is highly risky and can undermine your tax deferral.

• Another scenario is borrowing against the replacement property:
  Similarly, loading excessive debt onto your replacement property can create problems. If you borrow more than is needed to close the purchase, you could end up receiving excess cash back at settlement. That cash is treated as boot, and it will be taxable. The safer path is to borrow only what is necessary to acquire the replacement property and avoid creating a cash-out situation.

Refinancing strategies that coincide too closely with your exchange can be seen as disguised cash-outs. Work closely with your qualified intermediary and tax advisor before considering any refinance in connection with a 1031 exchange.

Final Takeaway – Don’t Touch the Money

In a fully taxed-deferred 1031 exchange, you should never touch the money.

Whether you call it “constructive receipt” or “taking boot,” the principle is clear. If you end up with cash in hand, your tax deferral is at risk. Work with a qualified intermediary before closing to make sure the proceeds flow directly into the exchange process.

That one step protects your funds, preserves your tax deferral, and keeps your 1031 exchange on solid legal ground.

Defer Your Tax and Build Your Wealth Over Time with a 1031 Exchange

A 1031 exchange allows you to build your wealth over the long run by deferring your capital gains taxes on the sale of investment real estate. This powerful provision of the tax code is available for all United States taxpayers to use. You do, however, need to meet certain guidelines in order to defer 100% of your capital gains taxes. A qualified intermediary can help you navigate this process and ensure you defer your taxes. Contact CPEC1031, LLC today at our Twin Cities office to learn more!

• 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 – Total vs. Partial 1031 Exchange Options

If you want to defer every penny of your taxes in a 1031 exchange you can do so. But not everyone wants a 100% tax deferred exchange. Some people are happy to take some taxable boot because they want to pay off debt, or they simply need the resources. When you take that cash you have to be willing to take your lumps in the form of taxation on that money.

Another technique that you may want to consider is instead of taking cash at the sale of the relinquished property, you could complete the exchange by reinvesting 100% of your cash proceeds into a replacement property of sufficient value. Later, in a subsequent transaction you could put debt on the replacement property. When you borrow money outside of the confines of a 1031 exchange you don’t pay taxes on that money because you have an obligation to repay that loan, so it’s not gross income. This two step process could save you a lot of money in taxes.

Get Your Like-Kind Exchange Off the Ground

Get your like-kind exchange of real property off the ground today by engaging a qualified intermediary at CPEC1031, LLC. With more than twenty years of experience at our backs, we have the skills and expertise needed to make sure your 1031 exchange is successful. Let us handle all the unique details of your 1031 exchange so you can focus on other things. Set up a time to discuss your next like-kind exchange with our team of qualified intermediaries. You can reach us at our Twin Cities office, 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

Video – A Reverse 1031 Exchange is NOT a Retroactive Exchange

Sometimes people contact a qualified intermediary after they’ve already purchased a replacement property and they want to sell a relinquished property and do what they think is a reverse exchange. However, a reverse 1031 exchange is not a retroactive 1031 exchange. A reverse exchange under Rev. Proc. 237 is really a parking arrangement where you have the qualified intermediary form an LLC to become your surrogate purchaser of that replacement property and hold it for up to 180 days. During that holding period you sell your relinquished property. A reverse exchange is not a retroactive exchange in which you are allowed to acquire the replacement property on your own and then sell your relinquished property later.

Defer Capital Gains Taxes and Continue Your Investment with a 1031 Exchange

A 1031 exchange allows you to defer capital gains taxes while continuing your investment when selling qualifying property that’s held for investment or business use. CPEC1031, LLC can help facilitate your 1031 exchange transaction and make sure you meet all the necessary benchmarks during the process. Our qualified intermediaries understand the ins and outs of section 1031 of the Internal Revenue Code. We’ve been working in the like-kind exchange industry for over twenty years and can help you through the details of your next 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

Want to Close More Real Estate Deals? Educate Your Clients on 1031 Exchanges

If you're a real estate agent, broker, or investor looking to increase transactions and unlock hidden inventory, it’s time to leverage the power of the 1031 exchange. Many property owners hold off on selling simply because they’re worried about paying capital gains taxes. That hesitation results in fewer listings (and fewer opportunities) for you.

Introduce Your Clients to the Power of the 1031 Exchange

Here’s the solution: Introduce your clients to the benefits of a 1031 tax-deferred exchange, a legal strategy that allows them to:

• Defer capital gains taxes when selling qualifying property

• Reinvest in higher-performing or more strategic real estate assets

• Scale their real estate portfolio without taking a tax hit

By educating your clients on how to use a 1031 exchange to sell and reinvest smarter, you're not just helping them, you’re creating more opportunities for yourself.

More Listings. More Buyers. More Closed Deals.

Whether you're working with seasoned investors or first-time sellers, understanding and promoting 1031 exchange strategies can dramatically increase your deal flow. Don’t leave money on the table. Use this powerful tool to unlock off-market opportunities and drive real estate growth.

Minnesota 1031 Exchange Services

Looking for 1031 exchange services for your next like-kind exchange of real estate? You’ve come to the right place. At CPEC1031, LLC our qualified intermediaries are well equipped to work through every step of the 1031 exchange process. For more than twenty years we have been facilitating forward exchanges, reverse exchanges, build-to-suit exchanges, and more. Let us help you through the ins and outs of the 1031 exchange process and make sure you don’t miss a beat. You can set up a time to chat with one of our qualified intermediaries by contacting us at our Twin Cities 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved