Reverse 1031 Exchanges: When and Why to Use Them

Reverse exchanges under section 1031 of the Internal Revenue Code are less common than forward exchanges. However, these types of exchanges can be invaluable in certain situations. In this article, our topic is reverse 1031 exchanges. We’ll talk about what they are, and when to use them effectively.

What is a Reverse 1031 Exchange?

A reverse 1031 exchange is similar to a forward exchange, but done in reverse order. Rather than selling your relinquished property first (as you would do in a typical forward exchange), you sell your replacement property first in a reverse exchange. Then, within the following 180 days, you sell your relinquished property. All of the 1031 rules and requirements still apply to reverse exchanges. You still only have 180 days total to complete your exchange (with the first 45 days set aside as your identification period). All property used in the exchange must be like-kind and held for investment or business use.

When & Why to Do a Reverse 1031 Exchange

So what is the benefit of conducting a reverse 1031 exchange? If the end goal is the same, why not just do a forward exchange?

Reverse exchanges can be extremely helpful in a hot seller’s market when properties are moving fast. A reverse exchange allows you to nail down a replacement property first so you can rest easy during the remainder of your exchange period. Otherwise, you run the risk of not being able to find suitable replacement property during the 180 day exchange period.

Start Deferring Your Capital Gains Taxes

Start deferring capital gains taxes on your next sale of qualifying property by doing a 1031 exchange. IRC Section 1031 has many benefits and can be used by any United States taxpayer. Contact a 1031 exchange professional to learn more about the like-kind exchange process. At CPEC1031, LLC we have been servicing the 1031 exchange industry for decades. Our team can handle your 1031 exchange, no matter how simple or complex. Give us a call today to learn more about our services and see how we can help you through the details of your next like-kind 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchanges Continue to Matter, for Investors and for the Economy

Recently, I joined the Federation of Exchange Accommodators (FEA) in Washington, D.C. to meet with lawmakers and advocate for the continued preservation of I.R.C. Section 1031.

These conversations matter.

Section 1031 has been part of the tax code for more than 100 years because it does more than benefit individual investors. It helps capital move more efficiently throughout the economy. It encourages reinvestment, improves real estate assets, creates jobs, and supports long-term economic activity in communities across the country.

A healthy 1031 exchange environment:

• Reduces the “lock-in effect” that keeps investors from reinvesting capital

• Keeps real estate markets active and capital moving

• Supports redevelopment, upgrades, and better use of property

• Fuels jobs across construction, lending, brokerage, legal, and related industries

• Encourages investment in housing, commercial real estate, and infrastructure

Like many areas of tax policy, Section 1031 is often revisited during tax policy discussions. While proposals and headlines can create uncertainty, the reality is that like-kind exchanges have consistently remained part of the tax code because of the important role they play in the economy. 

Without Section 1031, many investors would simply hold properties longer rather than reinvest. That can reduce transaction activity, slow redevelopment, limit property improvements, and ultimately create stagnation in portions of the real estate market. Fewer transactions can also mean less economic activity for the many industries connected to real estate. In fact, studies by Ernst & Young and Ling & Petrova show that eliminating Section 1031 would likely slow economic activity more than it would increase tax revenue.

That is why organizations like FEA continue to advocate for thoughtful policy and educate lawmakers on the broader economic benefits of 1031 exchanges.

I’m proud to support those efforts and to continue helping investors navigate strategies that preserve flexibility, encourage reinvestment, and support long-term growth.

To learn more about the economic impact of 1031 exchanges and the industry advocacy efforts, visit https://www.1031.org

• 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

Video – 1031 Exchanging Into Only Some of Your Identified Replacement Property

When you’re doing a 1031 exchange you have to identify your replacement property within 45 days and it has to be clearly and unambiguously defined. The identification must be signed by you in writing and sent in. But what happens if you don’t buy the entirety of what you identified? What if you identified four acres and you only ended up purchasing three of those four acres? Is that going to be satisfactory to the IRS for 1031 exchange purposes?

In an interesting treasury regulation for the treatment of 1031 exchanges, that same fact pattern came up. The taxpayer only ended up purchasing 75% of what they had originally identified. The IRS reasoned that the nature of what the taxpayer received was substantial the same and they allowed the 1031 exchange to proceed.

Consider the 1031 Exchange

The next time you’re selling a piece of investment real estate, consider a 1031 exchange that allows you to defer your capital gains tax burden. The catch is you have to reinvest your sales proceeds into a bigger replacement property. A 1031 exchange needs to be a continuation of your investment so pocketing any of the net proceeds is a big no-no. A qualified intermediary can help you through all these details and more. Contact the team at CPEC1031, LLC today to get started with your exchange. We have decades of experience in the 1031 exchange industry and have the knowledge to help you through your next like-kind 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

What Is a 1031 Exchange? A Simple Guide for First-Time Investors

The 1031 exchange is a powerful tax-deferral vehicle that savvy investors have been using for decades. Many taxpayers are interested in the benefits of 1031 exchange, but don’t know how the process works. This article will act as a simple guide to 1031 exchanges for first-time investors.

1031 Exchange Basics

Let’s start by defining the 1031 exchange. Section 1031 of the Internal Revenue Code is a provision that allows taxpayers to defer capital gains taxes when selling qualifying real estate. There are some important stipulations:

• All of the real estate involved in the transaction must be like-kind and held for investment or business purposes. That means you can’t use property held primarily for personal use.

• All of the proceeds from the sale of your relinquished property must be reinvested into a like-kind replacement property. A 1031 exchange must be a continuation of your investment so pocketing any cash proceeds is a no-no.

There are also several important deadlines you need to be aware of in a 1031 exchange:

• 180 Days. The 1031 exchange period is 180 days total. That timeline starts when you sell your relinquished property. You must complete your exchange within this timeframe in order to defer your taxes.

• 45 Days. During the first 45 days of that 180 day exchange period, you must identify in writing the replacement properties that you intend to exchange into.

Missing any of these deadlines will result in a failed exchange so it’s important to consult with a qualified intermediary who can make sure you are meeting all the requirements of section 1031.

Grow Your Wealth with a 1031 Exchange

There are many benefits of a 1031 exchange of investment or business real estate. Under section 1031 of the Internal Revenue Code, you are allowed to defer your capital gains tax burden on the sale of investment real estate so long as you reinvest your sales proceeds into a like-kind investment property. When you do everything correctly, you can defer your gains, and keep your money compounding and building over the long-run. This is a fantastic opportunity for tax-savvy investors and it can be utilized by any United States taxpayer. Contact CPEC1031, LLC today to learn more about the 1031 exchange process!

• 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

How the Internal Revenue Code Section 1031 Works in Plain English

1031 exchanges can get complicated quickly and many investors are intimidated by the process. That’s where we can help. In this article, we are going to outline how the 1031 exchange works in plain English.

The 1031 Exchange Process Explained

Let’s start with a brief explanation of the 1031 exchange process. There are several different types of 1031 exchanges, but the most common is known as the forward 1031 exchange. In this type of exchange, you begin by selling your relinquished property. Over the next 45 day period, you submit written identification of the replacement property you intend to use in the exchange. Then, within 180 days from the date of the sale of your relinquished property, you acquire your new replacement property.

In order to defer all of your capital gains taxes, you need to make sure that you reinvest 100% of your net proceeds from the sale of your relinquished property into your new replacement property. If you receive any cash during the process, it will be considered taxable “boot” and you will not be able to defer all of your capital gains taxes.

Defer Your Capital Gains Tax Burden with a 1031 Exchange

Defer your capital gains tax burden when selling investment or business real estate by engaging in a 1031 exchange transaction. Section 1031 of the Internal Revenue Code offers an excellent opportunity to defer your taxes and build your wealth over time in a continuation of your investment. The qualified intermediaries at CPEC1031, LLC have been facilitating 1031 exchanges of all shapes and sizes for decades. Let us help you through the details of your next like-kind exchange and start deferring your 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved