Video – Different Kinds of 1031 Exchanges

Forward Exchange

In a forward 1031 exchange, you sell your relinquished property first and you acquire the replacement property second. You can exchange into a single replacement property or multiple replacement properties.

Reverse Exchange

Another option is a reverse 1031 exchange, in which the intermediary acquires the replacement property and holds it for the benefit of the taxpayer. There are two different modalities of a reverse exchange:

1. The Back Leg Reverse Exchange. In this type of exchange, the qualified intermediary acquires the replacement property and holds it for the benefit of the taxpayer.

2. The Front Leg Reverse Exchange. If you can’t park the replacement property for some reason (for example, if your buyer flakes at the last minute), you can do a front leg reverse exchange. In this modality, the intermediary becomes the synthetic purchaser of your old relinquished property to liberate the taxpayer so they can acquire the replacement property.

The Build-to-Suit Exchange

In a build-to-suit 1031 exchange, you sell your relinquished property, put the sales proceeds with the intermediary, who then uses that money through an Exchange Accommodation Titleholder to buy the replacement land. Within the remaining 180 day exchange period, they construct improvements on the property. Let’s say you have a sale of $2 million and a purchase value of only $1.8 million. How do you resolve this $200K discrepancy? Have the intermediary erect improvements during the exchange period so when you receive the replacement property it’s worth at least $2 million.

Call CPEC1031, LLC Today

If you are interested in selling a piece of investment real estate but you don’t want to deal with the associated capital gains tax burden, then a 1031 exchange might be a good option for you! In a 1031 exchange, you can defer your capital gains taxes so long as you meet certain criteria. At CPEC1031, LLC we are here to help you through every step in the like-kind exchange process. We can prepare your documents, ensure you hit the 1031 exchange benchmarks, and answer all of your questions along the way. Get started with your 1031 exchange by giving us a call today!

• 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

Identify 1031 Exchange Replacement Property Options Early in the Process

Replacement property identification is one of the most important aspects of any 1031 exchange and it’s a potential trap for the unwary. In this article, we are going to offer up a few tips for identifying replacement property options early in the 1031 exchange process.

Deadlines to Remember

Remember – Two dates drive every 1031 exchange:

1. 45 Day Identification Period. You have 45 days to identify replacement property after you sell your relinquished property.

2. 180 Day Exchange Period. You have 180 days total to complete the exchange (or your tax return due date, including extensions, whichever comes first).

Do not wait until closing to start searching for replacement property. Consider Delaware Statutory Trusts (DSTs) as a potential alternative solution for timing, diversification, or passive ownership.

Bottom line: Do the work early and everything about your 1031 exchange becomes easier and more manageable.

1031 Exchange Help

If you are looking for help with your next 1031 exchange of real estate, contact the qualified intermediaries at CPEC1031, LLC today. Our team can help you through the ins and outs of your like-kind exchange of qualifying real property. Don’t get tripped up by all the details involved in a 1031 exchange. Work with a skilled intermediary to ensure you can defer 100% of your capital gains tax burden. Our intermediaries have more than two decades of experience facilitating 1031 exchanges of all shapes and sizes. Let us help you through the details of your next 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

Video – Potential Problems in a 1031 Exchange

In a 1031 exchange, you don’t want to buy down in value because then you aren’t continuing your investment into a property of equivalent or greater value.

You also want to avoid taking cash or other non-like-kind property during a 1031 exchange. Let’s say someone wants to buy your $20 million property that you own free and clear, but they’re having a hard time getting financing so they ask if you’ll entertain a contract for deed where they give you $2 million down and $18 million over time.

If you want to do a 1031 exchange you need to buy a property of equal or greater value and equity. If you sell on a contract for deed, you might be shooting yourself in the foot on the ability to do a 1031 exchange. In year one of an installment sale, you get to trigger all of the depreciation recapture. If you took that contract for deed deal, by the time you’re done paying your real estate commissions and recaptured depreciation, your downstroke may be gone. Don’t do seller-backed financing if you want to do a 1031 exchange.

Another potential 1031 problem is not adequately offsetting debt relief. When you sell your relinquished property, they pay off the old mortgage. In order to completely defer your gains in a 1031 exchange, you are expected to acquire a property of equivalent or greater value, equity, and debt. There are two ways to approach this debt relief issue:

1. Take out a new mortgage on the replacement property.

2. Bring cash to the closing table to offset the debt.

Most people opt for option one because they don’t have sufficient cash on hand.

Many people fail to consider the debt offset element in a 1031 exchange and that makes it much more difficult to defer 100% of the capital gains taxes.

Section 1031 – A Tax-Saving Tool

Section 1031 is a powerful provision in the tax code that allows you to save money when selling investment or business real estate. Find out if a 1031 exchange is a good fit for your property by contacting a 1031 exchange company like CPEC1031, LLC. Our qualified intermediaries have more than twenty years of experience in the 1031 exchange industry. We can walk you through the entire process from beginning to end and make sure you hit all the necessary deadlines and benchmarks along the way.

• 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

Who Is Responsible for the Replacement Property While Its Being Held in a Reverse 1031 Exchange?

In a reverse 1031 exchange, you acquire your replacement property first and park with an Exchange Accommodation Titleholder owned by your 1031 exchange company.

When the EAT (Exchange Accommodation Titleholder) that’s owned by the 1031 exchange company buys the replacement property, the exchange company doesn’t want to have anything to do with the property other than holding the bare legal title.

In order to fulfill the responsibilities of ownership, the exchange company often enters into a Triple Net Lease (or management agreement) wherein they lease the property to the taxpayer conducting the exchange for a nominal amount for the length of the exchange period (180 days). Through that master lease, the 1031 exchange taxpayer then controls the property. That means the 1031 taxpayer is also responsible for the taxes, debt service, insurance, and caring costs associated with the property throughout the 1031 exchange process.

Like-Kind Exchange Services

At CPEC1031, LLC we offer like-kind exchange services to taxpayers who own property throughout the United States. No matter where your property is located, we can help you defer your capital gains tax burden when selling qualifying real estate. Reach out to the skilled 1031 intermediaries at CPEC1031, LLC today to discuss the details of your exchange and make sure you are able to defer 100% of your capital gains taxes. You can contact us at our Minneapolis office to set up a time to speak.

• 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 – A Lesson on 1245 & 1250 Property in a 1031 Exchange

In a 1031 exchange, if you treat your property both as 1250 property and as rapidly depreciated components (1245 property) and you exchange right into raw land, there’s going to be a mismatch. That’s because the raw land is considered entirely 1250 property.

This can lead to a mismatch wherein the portion of the property that you treated for rapid depreciation doesn’t have a component to match up with on the replacement property side of the equation. In this scenario, you may not want to purchase purely raw land as your replacement property. You may want to look for some land that has some depreciable components on it (such as a grain silo, chicken coop, etc.) so that you can match up your 1250 gain and your 1245 gain when conducting your 1031 exchange.

Defer Your Taxes When Selling Investment Real Estate

Instead of recognizing a potentially huge capital gains tax burden, defer your taxes with a 1031 exchange when selling investment real estate. Section 1031 of the Internal Revenue Code can be utilized by anyone who satisfies the requirements. Contact a qualified intermediary at CPEC1031, LLC today to learn more about the like-kind exchange process and see if your property qualifies for 1031 exchange treatment. You can find us at our Twin Cities office, which is located in downtown Minneapolis. We are ready and waiting to help you through the 1031 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