How to Reinvest Your Commercial Real Estate Returns

Reinvesting your real estate returns is easy with section 1031 of the Internal Revenue Code. In this article, we are going to offer up some tips for reinvesting your real estate returns using a 1031 exchange.

Defer Taxes

The beauty of a 1031 exchange is that, when done properly, you can defer your capital gains taxes by continually reinvesting the sales proceeds into new replacement property. This allows you to keep your money working for you in a continued investment, compounding wealth over time rather than cutting a check to the government.

Always Trade Up

One important thing to keep in mind when exchanging like-kind property is that you always want to trade up when it comes to your replacement property. That means your replacement property needs to be equal to or greater than your relinquished property in value, equity, and debt. In order to defer 100% of your gains, you need to be sure to satisfy these requirements.

Be Mindful of Your Timing

1031 exchanges are governed by strict time lines. Be sure you meet the necessary deadlines or your exchange will fail.

1031 Exchange Resources

If you need help with your 1031 exchange, let the professionals at CPEC1031 help. Our qualified intermediaries have two decades of experience assisting clients with their real estate exchanges under section 1031 of the Internal Revenue Code. We can help advise you throughout the process, prepare your documentation, and answer all of your questions. Contact us today at our downtown Minneapolis office to learn more about our services and get started with your very own 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

The Housing Hack for Tax-Efficient Real Estate Investing

Lately, many people have been engaging in the “housing hack” in which they buy a duplex with first-time home assistance (so they have a low-down payment and low interest rate) and move into one half of the duplex. They then rent out the other side of the duplex and use the rental income from their tenant to supplement the cost of the mortgage, the property taxes, and insurance.

If you do the housing hack well you can almost live for free without having to deal with the expenses of ownership because the tenancy leasehold is covering a lot of your overhead for the mortgage taxes and insurance.

Cost-Effective & Tax-Efficient

You still have a lot of ownership responsibilities of course. There are always things that break on a house, as well as routine maintenance and unexpected repairs, but in general this is a very cost-effective and tax-efficient way to get into the real estate market.

Young people are buying these smaller rental properties and driving a lot of mom and pop owners to sell and subsequently exchange into a different type of real estate that’s less management intensive.

It's a great time to be a seller right now. There is very little inventory, lots of demand, and cost of financing is incredibly cheap. These factors are driving demand higher, which makes it a very difficult time to be a buyer. That's where people are having trouble with their 1031 exchanges currently as they’re getting outbid or unable to lock down a replacement property fast enough. This is why it’s always important to remember the 1031 exchange time period that you have to abide by in order to complete a successful 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.

© 2021 Copyright Jeffrey R. Peterson All Rights Reserved

Recent Trends in the Commercial Real Estate Economy

The commercial real estate economy can shift quickly and it can be difficult to stay on top of recent trends. In this article, we are going to discuss some trends that we see in the real estate economy as they relate to 1031 exchanges.

Property Management Fatigue

I have a lot of clients that have highly appreciated duplexes and single-family rental properties, and the owners are getting tired of managing these properties.

They don’t want to deal with tenants, trash, toilets, and collecting rent. As a result, they’re wanting to sell their properties and transition into other investments (whether it's triple-net-lease, single-tenant, or some other type) and try their hand at some other aspect of commercial real estate.

Regulation & Rent Control

We're also seeing some fear in the Minneapolis-St. Paul metro area that rent control and more regulation of landlords will make the business of renting even more difficult.

The landlords in Minneapolis and Saint Paul have dealt with increased property taxes and regulatory restrictions for quite a while and now many of them are done staying in that space. These investors are looking at this as a great opportunity to sell at the top of the market and reposition into other segments that are less management-intensive, such as medical office

We’ve seen an increase in marketplace velocity in 2021 and it’s mostly small investors driving this increase. It’s mom and pop stores and landlords who own small single-family rental duplexes, four-plexes, farmers, or other business owners that are taking advantage of this high-value, low interest environment to transition into other real estate Investments.

• 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.

© 2021 Copyright Jeffrey R. Peterson All Rights Reserved

How 1031 Exchanges Can Help You Launch Your Real Estate Investing Business

Section 1031 of the Internal Revenue Code is a fantastic and useful tool for real estate investors of all sizes. In this article, we are going to explain how you can use 1031 exchanges to help launch your real estate investing business.

Save Money by Deferring Capital Gains Taxes

The big draw of a 1031 exchange is that it allows you to defer your capital gains taxes when selling qualifying real property. That’s a huge benefit when you’re trying to launch a commercial real estate investing business. Many investors avail themselves of the 1031 exchange provision of the tax code to move into different sectors of the market or to “exchange up” into bigger replacement property. A 1031 exchange keeps your money working for you in a larger, continued investment – rather than having that money be tied up in capital gains tax liability.

Contact a Qualified Intermediary

If you are looking for assistance with your 1031 exchange, contact a qualified intermediary today! CPEC1031 has over two decades of experience working with investors on their 1031 exchanges. We can advise you, answer your questions, and prepare all the necessary documentation for your exchange. Contact us today to see how we can help you defer 100% of your capital gains tax when selling real estate. Our primary office is located in downtown Minneapolis. We also have numerous satellite offices across the United States.

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

Tips for Finding a Real Estate Attorney to Help with Your 1031 Exchange

Finding a real estate attorney is an important aspect before becoming involved in real estate investing or a 1031 exchange. The right one will keep you on track and help lessen your liability in your real estate investments. Here are a few tips for finding a good real estate attorney for your 1031 exchange.

Tips for Finding a Good Attorney

• Talk to friends, family members and co-workers, or your state's Bar Association for referrals.

• Talk to local real estate brokers for referrals.

• Call a local realtors association for referrals.

• Prepare a list of questions pertaining to your situation. Most lawyers will answer simple questions over the phone for free.

• Identify a number of possible attorneys and call each one.

• Ask how much each lawyer charges per hour, and request an estimate of the time required to complete the tasks you require – looking over contracts, handling disclosures, and helping with the closing.

• Choose an attorney.

Questions to Ask

Here are some questions to ask your attorney when considering who to hire:

• What experience do you have in creative real estate investing such as subject to investing The Attorney should be open to and understand creative real estate investing.

• How much of your practice is in real estate? It should be at least 30% to 50%. In smaller markets there would be less need for an attorney to devote all their practice to real estate.

• Do you have other real estate investors as clients? If so, ask if you can contact them for references.

• What are your fees? The price the attorney charges is not as important as how well they work for you. The old proverb you get what you pay for applies here.

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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved