The ultimate goal of any 1031 exchange is 100% tax deferral, but in order to do that you need to abide by various rules and requirements. In this article, we are going to discuss how to improve your odds of deferring 100% of your capital gains tax burden when doing a 1031 exchange.
Keep an Eye on Your Timelines
In order to complete a successful 1031 exchange, you have to finish all necessary tasks within your allotted time periods. Specifically, you have 180 days in total from the beginning of your exchange to the end. The first 45 of those days (running concurrently) are set aside as your identification period. You have to identify, in writing, your replacement properties within those 45 days. Fail to meet either of these deadlines and you will not be able to defer your capital gains taxes on the sale.
Monitor Your Value, Equity & Debt
You also need to monitor your value, equity, and debt throughout the 1031 exchange. In order to defer 100% of your gains, you need to make sure that your replacement property is equal to or greater than your relinquished property in the categories of value, equity, and debt. Fail to meet these thresholds and you may only be able to partially defer your capital gains taxes.
Take the First Step in Your 1031 Exchange Journey
Take the first step in your 1031 exchange journey by contacting a qualified intermediary at CPEC1031, LLC. Our team has been facilitating 1031 transactions for more than two decades. We have the knowledge and expertise needed to ensure you are set up to defer 100% of your capital gains tax burden when selling real estate in a 1031 exchange. Let us walk you through the process and make sure you have everything set up properly. Contact us today at our Twin Cities office in downtown Minneapolis to learn more about our services and how we can help you defer capital gains taxes.
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.
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