Can You 1031 Exchange from Rental to Retail?

Many taxpayers have questions about what types of property they can and cannot use in a 1031 exchange. In this article, we are going to talk about 1031 exchanging between different industry sectors (rental, retail, agricultural, and beyond!)

1031 Exchanges Between Industry Sectors

One of the greatest benefits of doing a 1031 exchange is that you can exchange out of and into different industry sectors. For example, you can sell a rental property like a duplex and use your sales proceeds to purchase a retail space as your replacement property. So long as your property is like-kind, you can exchange between any industry sector that you wish.

Qualifying Property

It’s important to remember that your property, regardless of what industry sector it’s in, still needs to satisfy the 1031 exchange property requirements. Specifically, it needs to be like-kind and held for investment purposes or for use in your trade of business. Make sure you are meeting these requirements before you dive into your 1031 exchange.

Like-Kind Exchanges in Minneapolis

If you are interested in saving money in capital gains taxes when you sell investment real estate, a like-kind exchange may be a great option for you. CPEC1031, LLC can help you navigate the waters of your 1031 exchange, making sure you have a good grasp of the ins and outs along the way. We can help you achieve the capital gains tax deferral you’re looking for. Contact us today at our downtown Minneapolis office for more information about our services and how we can help you through the details of your next 1031 exchange of real estate.

• 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

Is it Possible to Take Cash Out if Part of the 1031 Exchange Property is Homesteaded?

Recently, we were asked the following question:

• In a 1031 exchange, is it possible to take care out if a portion of the 1031 exchange property is homesteaded?

That’s our topic for today’s article – 1031 exchanges involving property that is part owner-occupied and part business.

Partial 1031 Exchanges

If the relinquished property is part owner-occupied and part business or rental (for example, a duplex that is half rented and half owned-occupied), then the IRC Section 121 principal residence exclusion may apply to the owner-occupied proceeds if you have owned the property and lived in it for at least two out of the proceeding five years.

Additionally, IRC section 1031 may allow for the deferral of gains on the portion of the proceeds that relate to the business or rental part of the property. You can’t buy for a transaction and use both of these preferential tax provisions.

CPEC1031, LLC – Like-Kind Exchange Company

CPEC1031, LLC offers like-kind exchange services to taxpayers throughout the entire United States. Regardless of where your investment property is located in the US, we can help facilitate your exchange under section 1031 of the Internal Revenue Code. Many taxpayers have availed themselves of the tax saving benefits of the 1031 exchange and you can too! Contact our qualified intermediaries today to learn more about the various benefits of like-kind exchanges, whether you are a good candidate for 1031, and how we can help.

• 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 – Consolidating LLCs or Partnerships Prior to a 1031 Exchange

In a 1031 exchange, the general rule is you can’t exchange into that which you already own because that wouldn’t be an “exchange.” But what if you’re in a partnership or LLC and you want to buy out all of the other partners, and you want to use your 1031 exchange funds for that purchase and consolidate 100% of the ownership in your sole name?

Revenue Rule 96-6 is your friend in this scenario. It tells us that when you consolidate 100% of a partnership and make it into a disregarded entity that you’re basically deemed to have acquired the real estate of the exiting partners. This is a great planning tool to consolidate partnerships and take control of the project for yourself.

Defer Capital Gains Taxes with a 1031 Exchange

Defer your capital gains tax bill when selling investment real estate by conducting a 1031 exchange rather than a straightforward sale. CPEC1031, LLC has been working on 1031 exchanges for decades. We can help you through the entire 1031 exchange process – from the sale of your relinquished property to the identification and acquisition of your replacement property. Contact us today to learn more about the many benefits of section 1031 and see how you can save money on capital gains taxes when you sell qualifying real estate.

• 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

1031 Exchange Strategies for 100% Tax Deferral

The ultimate goal of most 1031 exchanges is 100% capital gains tax deferral on the sale of qualifying property. Unfortunately, due to a variety of potential pitfalls, sometimes taxpayers are only able to defer part of their gain. In this article, we are going to talk about a few strategies you can employ to help ensure 100% tax deferral during your 1031 exchange.

Keep an Eye on Your Value, Equity & Debt

In a 1031 exchange, you ideally want to exchange into a replacement property that’s bigger and better than your relinquished property. To that end, it’s important to keep an eye on your value, equity, and debt when looking for a replacement property. If you want to defer 100% of your gains, make sure your replacement property is equal to or greater than your relinquished property in all three of these categories (value, equity, and debt).

Don’t Miss Your Deadlines

The 180 day exchange period is a strict time frame. If you do not complete your 1031 exchange within this time period, your exchange will fail and you won’t be able to defer any of your gains. It’s important to plan ahead and work with a qualified intermediary who can help set you up for success.

Contact a Minnesota Like-Kind Exchange Company

Contact Minnesota like-kind exchange company, CPEC1031, LLC today for help with your next 1031 exchange of real property. Our qualified intermediaries have decades of experience working with taxpayers on all types of 1031 exchanges. You can find us at our primary office in downtown Minneapolis. We work with clients throughout the entire state of Minnesota, as well as the United States at large. No matter where your transaction is taking place, we can help you defer capital gains taxes. Give us a call today to get started!

• 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

Can I 1031 Exchange into a Business (Such as an LLC or a Partnership)?

A common question we get asked is: “can I 1031 exchange into a business, such as an LLC or partnership?”

1031 Exchanges and Business Property

The good will of a business is generally excluded from 1031 treatment.

Partnership interests are generally excluded from 1031 treatment.

According to concepts in Rev. Rul. 99-6 and as applied to 1031 exchanges, one can be deemed to have received real property by means of receiving an assignment consolidating 100% of the membership interest in a single-member LLC (an entity that holds title to real property for 1031 purposes), so that the entity is disregarded for federal income tax purposes...and 100% owned by the taxpayer completing the exchange. The portion of the underlying real property corresponding to the part ownership entity that was not owned previously can constitute real property for 1031 purposes.

Purchase of a partnership interest that results in actual termination of the entity is treated as an “asset” purchase (of the underlying real property assets) with respect to the portion purchased.

McCauslen v. Commissioner,45 T.C. 588 (1966)

The sole owner of an LLC, which is disregarded for tax purposes, is in the same position economically as if he/she had taken title in his/her own individual name. Ltr Rul9751012.https://www.irs.gov/pub/irs-wd/1048025.pdf

Another Authority is: Reg Section 301.7701-2 and 3.

Exchange Your Investment Property & Defer Your Capital Gains Taxes

Under section 1031 of the Internal Revenue Code, you can exchange your investment property for like-kind replacement property and defer your capital gains taxes in the process. At CPEC1031, LLC we are here to help you with all things related to your 1031 exchange. We have more than two decades of experience in the 1031 exchange industry and can put our experience to work on your next like-kind exchange. Bring your questions to a skilled intermediary at CPEC1031 today. You can find us at our downtown Minneapolis office.

• 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