Taxes

Do You Have to Pay Taxes When Selling Investment Property?

Taxes on Investment Property

If you’re holding onto a piece of investment real estate, a big factor that goes into determining whether or not to sell is the amount of capital gains taxes you’ll need to pay on the sales proceeds. In this article, we are going to talk about whether or not you need to pay taxes when selling investment real estate.

A Standard Real Estate Sale

In a typical, straight-forward sale of investment real estate, you are responsible for paying capital gains taxes on the sale. Depending on the property in question, its location, and various other factors, this can lead to a sizeable tax bill that often leads sellers to avoid selling altogether.

The 1031 Exchange Alternative

If you’re concerned about your potential capital gains tax burden on the sale of property, a 1031 exchange may be a great alternative to an outright sale. In a 1031 exchange, you are allowed to defer 100% of your capital gains tax burden so long as you reinvest your net proceeds from the sale into a replacement property. This has the added benefit of keeping your money compounding over time in a continued investment.

1031 Exchange Intermediaries in, MN

Commercial Partners Exchange Company offers a full range of 1031 exchange services to clients throughout the state of Minnesota and across the country. We have two decades of experience working on all types of exchanges – forward, reverse, build-to-suit – you name it! Let us put our experience to work on your exchange. We will walk you through the entire process and make sure you fully understand each and every step. Contact us today to learn more about our services. You can find us at our primary office in downtown Minneapolis, or at one of our satellite offices around 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchange – The Best Way to Defer Capital Gains Taxes

Defer Capital Gains Tax

Capital gains taxes are a big point of concern for any taxpayer considering a sale of real property. Section 1031 of the Internal Revenue Code offers a method for deferring capital gains taxes on the sale of real estate. In this article, we are going to explain how a 1031 exchange is the best way to defer capital gains taxes when selling real estate.

The 1031 Exchange Process

Let’s start with a brief breakdown of the 1031 exchange process. The idea behind section 1031 is that instead of selling property in an outright sale, you exchange your property for a newer, bigger replacement property. Here’s how the process typically works:

  • You sell your relinquished property.

  • You identify new replacement property.

  • You redeploy your net proceeds from the relinquished property into the replacement property.

The Result? Capital Gains Tax Deferral

If you meet all the necessary requirements, you will be able to defer 100% of your capital gains tax burden on the sale. Depending on the property in question, this can result in a HUGE tax savings.

Defer Capital Gains Taxes

If you are looking to sell a piece of investment real estate, but are hesitating because of the potential capital gains taxes, then a 1031 exchange may be right for you! Contact one of the 1031 exchange professionals at Commercial Partners Exchange Company today to learn more about the process of exchanging property under section 1031 of the Internal Revenue Code. Our qualified intermediaries have over two decades of experience helping clients with their real estate exchanges. Contact us today at our Minneapolis office or one of our satellite offices around the country 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.

 

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

 

How Long Should You Keep Your Tax Records for 1031 Exchange Purposes?

1031 Exchange Tax Documents

Many taxpayers wonder how long they should hold onto their tax records. A couple years? 10 years? Forever? In this article, we’re going to talk about how long to keep your tax records, specifically when it comes to 1031 exchanges of real estate.

The Safe Answer

There really isn’t a hard and fast rule about how long you should keep your tax forms. But the safest answer to the question posed above is forever. If you always have your tax forms on hand, you’ll always have them if a need arises. With the ubiquity of cloud storage services available, keeping these files stored digitally has never been easier.

1031 Exchange Documents

Keeping your tax documents on hand is especially important when it comes to 1031 exchanges. You want to be able to prove to the IRS that your exchange is legitimate at all times. If the IRS performs an audit a decade from now and they start asking questions about an exchange you did twenty years ago, you want to be sure that you have the required documents on file to back up your exchange.

1031 Exchange Your Property!

If you’re thinking about doing a 1031 exchange on your property, you’ve come to the right place! At Commercial Partners Exchange Company, we help taxpayers large and small with their like-kind exchanges of real estate. Our team has two decades of experience that we put to work on every exchange we facilitate. Reach out to us at our downtown Minneapolis office today to learn more about the 1031 exchange process and get started with your real estate 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.

 

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

 

2019 Long-Term Capital Gains Tax Rates

Capital Gains Taxes in 2019

Capital gains taxes are top-of-mind for anyone looking to sell a piece of property. For many investors, if capital gains taxes are too high, they won’t sell their property. In this article, we are going to discuss the 2019 long-term capital gains tax rates and how a 1031 exchange can help you defer these taxes when selling property.

Capital Gains Tax Rates in 2019

The table below outlines the 2019 long-term capital gains tax brackets by income and filing status:

Capital Gains Taxes

Consider a 1031 Exchange

A 1031 exchange can help you avoid these hefty capital gains tax burdens. By moving all of your net proceeds into a new replacement property, you can effectively defer your capital gains taxes. This has the added benefit of keeping your money working for you in a continued investment – compounding and building wealth over time.

Meet with a Qualified Intermediary

If you’re mulling over the possibility of doing a 1031 exchange on your piece of real estate, do yourself a favor and meet with a qualified intermediary to discuss your situation. At Commercial Partners Exchange Company, our intermediaries have more than two decades of experience facilitating exchanges for taxpayers in all industries and geographic locations. Reach out to our 1031 exchange professionals today at our downtown Minneapolis office to talk about the details of your exchange and start saving money on taxes right away!

  • 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

 

What’s the Difference Between Deferring & Avoiding Taxes?

Tax Deferral

When some people discuss the benefits of 1031 exchanges, they highlight how a 1031 exchange can help you “avoid” taxes. What they really mean is that 1031 exchanges can help you “defer” taxes. In this article, we are going to talk about the difference between tax deferral and tax avoidance.

Tax Avoidance

Put simply, avoiding taxes is illegal. The term “tax avoidance” implies that the taxpayer is actively working to avoid paying the taxes that they owe. This is different from the tax deferral benefits of a 1031 exchange. With tax deferral, you are simply postponing your tax payment until a later point in time – in this case, whenever you decide to sell your replacement property.

Tax Deferral

Tax deferral, on the other hand, is perfectly legal under the right circumstances – such as a 1031 exchange. A like-kind exchange allows you to defer (not avoid) your capital gains taxes when selling real estate. The difference is that you are deferring your taxes until a later date (if/when you decide to sell your replacement property), rather than avoiding them completely.

Start a Like-Kind Exchange Now

If you’re looking to start a like-kind exchange, reach out to our qualified intermediaries today! At Commercial Partners Exchange Company, we have two decades of experience helping clients through their 1031 exchanges. Our primary office is located in downtown Minneapolis, but we work with clients throughout the state of Minnesota and all around the United States. Contact us today to learn more about our 1031 exchange services and start your like-kind exchange now!

  •  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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved