9 Tips for a Successful 1031 Exchange

There are many things that can go wrong during the 1031 exchange process. It’s important to do everything in your power to set yourself up for success. To that end, here are nine tips for conducting a successful 1031 exchange of investment real estate:

• Not all improvements count toward replacement value in a 1031 exchange. To qualify, the right planning must happen before the work begins.

• Selling expenses may reduce exchange proceeds, but they do not automatically eliminate taxable boot. How the numbers align matters just as much as the property itself.

• Not every partner has to make the same 1031 decision, but separating paths takes planning. Deal mechanics, documentation, and timing are critical.

• A 1031 exchange is not just about today’s deal, it is part of a long-term portfolio and estate strategy.

• Raw land, rentals, and commercial property can all be exchanged, but depreciation and planning differ. Consider the tax consequences before you decide what to buy next.

• Reverse exchanges exist for a reason. Sometimes the smartest move is to buy first, because opportunities don’t wait for your sale.

• A 1031 exchange doesn’t mean you have to buy another property you actively manage. You can exchange into more passive real estate and still defer taxes.

• A DST is not just a backup plan. It can be a strategic tool for diversification and timing flexibility.

• Closing costs can reduce proceeds, but they don’t automatically protect you from taxable boot. Understanding the exchange math before closing can help prevent unexpected taxes.

CPEC1031, LLC in Minneapolis, MN

CPEC1031, LLC works with investors across the United States on 1031 exchanges of all types. We can help prepare all of your documentation, and ensure you are following all of the rules and requirements of section 1031 so that you are able to defer 100% of your capital gains tax burden. Let us guide you through the 1031 exchange process. Contact our team today at our primary Twin Cities office in downtown Minneapolis to learn more about the full range of 1031 services we provide. Our team is ready and waiting to help you through the ins and outs of 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

What Happens If a 1031 Exchange Fails?

There are a few ways in which a 1031 exchange can fail. In this article, we are going to discuss what your options are when a 1031 exchange fails.

Missed Deadlines

One of the most common reasons for failure is missing a deadline. The 1031 exchange process is governed by strict deadlines that you must hit in order to complete a successful exchange. Specifically, you have 180 days from the start of your exchange to the finish of your exchange. The first 45 of those days are your replacement property identification period, during which you must give written identification of your replacement property. If you go beyond either of these deadlines, your exchange will fail and you will not be able to defer your capital gains taxes.

Receiving Taxable Boot

The other common cause of failure in a 1031 exchange is receiving cash boot during the process. A 1031 exchange is meant to be a continuation of your investment. To that end, you must redeploy all of the sales proceeds from the sale of your relinquished property into your replacement property. If you pocket any of the sales proceeds or take any cash off the table during the process, that is considered taxable boot that you will not be able to defer your capital gains taxes on.

Save Money in Capital Gains Taxes

With a 1031 exchange, you can save money in capital gains taxes when selling investment or business real estate. A like-kind exchange under section 1031 of the Internal Revenue Code can be done with any like-kind US property so long as all property involved is held for the purposes of investment or business use. A qualified intermediary, such as those at CPEC1031, can help facilitate the 1031 exchange process and ensure you are able to defer 100% of your capital gains tax burden. Contact us today to learn more about the 1031 exchange process and see what the first steps are to exchange your property!

• 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

The Importance of Having a Plan B in a 1031 Exchange

The 45-day identification window can move quickly in a 𝟭𝟬𝟯𝟭 𝗘𝘅𝗰𝗵𝗮𝗻𝗴𝗲. While direct property acquisition is often Plan A, investors may also want to consider whether a 𝗗𝗲𝗹𝗮𝘄𝗮𝗿𝗲 𝗦𝘁𝗮𝘁𝘂𝘁𝗼𝗿𝘆 𝗧𝗿𝘂𝘀𝘁, or DST, belongs in their backup plan.

Don’t let the 45-day identification deadline drive your investment decision.

Plan A – Direct Property Acquisition:

• Offers greater control

• Allows you to select your own property

• Has the potential for appreciation

Plan B – Delaware Statutory Trust (DST):

• Passive ownership

• Eligible for 1031 exchange treatment

• Potential backup option when replacement property is limited

Before Investing in a DST, ask yourself these questions:

• Who is the sponsor of the DST?

• What is the exit strategy?

• Are distributions supported by underlying property cash flow?

The best 1031 exchange starts from both a tax perspective and an investment perspective. Make sure you consider both before beginning your 1031 exchange.

See If Your Property Qualifies for 1031 Exchange Treatment

Work with a qualified intermediary you can count on throughout the 1031 exchange process by hiring CPEC1031, LLC. We facilitate 1031 exchange transactions across the Twin Cities, greater Minnesota, and throughout the United States. No matter where your property is located, we have the skills and experience needed to make sure you can defer 100% of your capital gains tax burden. Reach out to our intermediaries today to learn more about the process and see if you qualify for 1031 exchange treatment.

• 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

3 Common 1031 Exchange Mistakes (and How to Avoid Them)

There are numerous things that can go wrong during a 1031 exchange of investment real estate. In this article, we are going to walk through some of the most common 1031 exchange mistakes and how to avoid them.

Mistake: Missing Your 1031 Exchange Deadlines

In a 1031 exchange, there are very specific and strict time deadlines. You only have a total of 180 days from the start of your exchange to the end of your exchange. That timeframe can be shortened if your federal tax filing deadline falls within your 180 day exchange period. In this situation, your exchange needs to be completed by your tax filing date. Going beyond these deadlines is a nonstarter. Your exchange will fail if you miss these deadlines.

Mistake: Failing to Identify Your Replacement Property

You also have another deadline to keep in mind – the 45 day identification deadline. This timeline runs concurrently with your 180 day exchange timeline. During this 45 day period, you have to give written identification of the replacement properties you intend to use in your exchange. If you do not identify a property within this time period, you cannot exchange into it.

Mistake: Not Reinvesting All of Your Sales Proceeds

A 1031 exchange is meant to be a continuation of your initial investment. To that end, you need to reinvest 100 of your sales proceeds from your relinquished property into your replacement property. If you take any of these proceeds as cash, that will be considered taxable boot and you will not be able to defer 100% of the gains.

Defer 100% of Your Capital Gains Tax Burden

Let the qualified intermediaries at CPEC1031, LLC help bring your like-kind exchange of real estate across the finish line! Our team has decades of experience facilitating forward, reverse, and build-to-suit 1031 exchanges. We work with clients across the state of Minnesota and throughout the entire United States. Regardless of where your property is located, we can help you through the 1031 exchange process and do everything possible to ensure you can defer 100% of your capital gains tax burden. Learn more about our services by contacting us 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

Can You 1031 Exchange Your Primary Residence?

Many people wonder if they can do a 1031 exchange with their primary home. In this article, we are going to talk about whether or not you can conduct a 1031 exchange involving your primary residence.

1031 Exchanges Involving Primary Residences

The short answer to the question at hand is no. All property used in a 1031 exchange must be held for either investment purposes or for use in your trade or business. Your primary residence is not held for such purposes – it’s held for personal use. As a result you cannot exchange your primary residence in a 1031 transaction.

There are certain situations in which you may be able to do a 1031 exchange with a property that was formerly your primary residence. For example, if you lived in a home for several years, and then decided to rent that property out after moving to another home, you may be able to do a 1031 exchange on the property. That being said, you would likely need to continue renting that property out for a considerable amount of time (at least a couple of years) before doing the exchange. These types of exchanges can get tricky so it’s important to work with a qualified intermediary who can walk you through the process and help you make informed decisions.

Work with a Qualified Intermediary at CPEC1031, LLC

It’s important to work with a qualified intermediary in any type of 1031 exchange (forward, reverse, build-to-suit) to ensure the successful deferral of capital gains taxes. At CPEC1031, LLC our qualified intermediaries have been providing services to taxpayers conducting 1031 exchanges for decades. Let us handle all the minutiae of the 1031 exchange process so you don’t have to. Our primary offices are located in downtown Minneapolis. Reach out today to see if your property is a good candidate for 1031 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved