A 1031 exchange is a powerful tool in the tax code that can help you build long-term wealth. But how exactly would an investor use 1031 exchanges to increase their wealth over the long run? In this article, we are going to talk about how to use 1031 exchanges to level up from single-family rental properties to larger commercial properties.
Start Small and Level Up
One of the biggest misconceptions about 1031 exchanges is that you have to be a big time commercial real estate investor to use section 1031. That’s not true at all. Section 1031 of the Internal Revenue Code is available for all US taxpayers to use. In fact, many of the clients we work with are small “mom-and-pop” shops that want to sell their property while deferring their capital gains tax burden. In other words, many taxpayers who utilized 1031 exchanges start small.
Let’s say you own a sing-family rental property in Minneapolis. So long as you meet all the requirements for 1031 exchange, you can exchange that property in a 1031 transaction and reinvest the sales proceeds into a bigger property (a four-plex for example) and defer your capital gains taxes in the process. You can even continue exchanging up into bigger and bigger properties over time – going from a single family unit, to a four-plex, to an apartment complex, etc. This is how investors truly level up through the use of the awesome power of the 1031 exchange!
Contact CPEC1031, LLC at Our Minneapolis Office
The best thing you can do to set yourself up for a successful 1031 exchange is work with a qualified intermediary throughout the exchange process. Contact the 1031 intermediaries at CPEC1031, LLC today at our downtown Minneapolis office to start your next 1031 exchange of investment or business real estate. We work with clients on their 1031 exchanges throughout the state of Minnesota and across the United States. No matter where your property is located, we have the skills and experience needed to help you defer your capital gains taxes in a 1031 transaction.
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