like kind

To Exchange, or Not to Exchange - A 1031 Case Study

Like-Kind Exchange Deferral

Here’s an interesting 1031 exchange case we recently assisted a client with. The client was selling a Jiffy Lube in St. Paul and was wondering whether or not to do a 1031 exchange on the property. The seller was concerned about feeling pressured into a less-than-ideal acquisition if they couldn’t find a replacement property that fit their desires.

This is a common dilemma that many face when considering a 1031 exchange. Should you set up the exchange, and if you can’t find a quality replacement property, break the exchange, pay the taxes, and only be worse off the reasonable costs incurred to have set up the exchange?

 Keep Your Options on the Table

I would set up the 1031 exchange to keep all of the options (for tax deferral) on the table for as long as possible. You don’t have identify any replacement properties if you don’t see any good deals within the 45 day identification period; and if you do identify, you don’t have to purchase any of the identified replacement properties during the remaining 135 days (of the 180-day exchange period), if your due diligence results are not favorable. Yes you can fail, but if you don't try you will never know if you could both defer the tax and receive a truly quality replacement property to complete your 1031 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

What “Like-Kind” Means in 2018

Like-Kind Property 2018

2018 has brought changes to the 1031 exchange industry – with the implementation of the Tax Cuts & Jobs Act in January. In this article, we are going to talk about what exactly “like-kind” means in 2018.

Defining Like-Kind

“Like-Kind” is one of the most important terms in a 1031 exchange. All property involved in a given 1031 exchange has to be like-kind. In other words, your relinquished property and your replacement property both need to be similar in disposition to one another. Thankfully, the definition of like-kind real estate is very broad – with most real property considered like-kind to most other real property.

The biggest change to “like-kind” in 2018 is in the realm of personal property. Historically, the definition of like-kind personal property has been much more strict than that of real property. However, the Tax Cuts & Jobs Act effectively axed personal property from 1031 treatment. As a result, personal property is not eligible for 1031 treatment and no personal property is considered “like-kind” for 1031 purposes.

Tax Deferral with Section 1031

Looking to sell real estate but don’t want to shoulder the burden of the associated capital gains taxes? A 1031 exchange of real property can help you achieve these goals of tax deferral. When you’re embarking on a 1031 exchange, make sure you work with a qualified intermediary with experience. At Commercial Partners Exchange Company, we have over twenty years of experience facilitating all types of like-kind exchanges. We bring that experience to every transaction we facilitate so you can feel comfortable that you are in good hands. Contact us today at our Minneapolis office to speak with an intermediary about your 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

Is a 1031 Exchange Worth the Trouble?

1031 Exchange Trouble

Many people are aware of the benefits of a 1031 exchange, but might not want to go through the hassle of setting up an exchange – thinking that they’d rather just sell their property, pay their capital gains taxes, and be done with it. But a 1031 exchange really isn’t as much of a hassle as many people think. In this article, we are going to explain why a 1031 exchange of real estate is worth any associated “trouble.”

The Benefits of a 1031 Real Estate Exchange

A 1031 exchange allows you to defer your capital gains taxes when selling real estate as long as you move those net proceeds into a like-kind investment property.

That’s a significant amount of money you can save by conducting a 1031 exchange. In a typical sale, that money would be gone – out of your hands after the sale. But a 1031 exchange allows you to hold onto that capital gains tax money and reinvest it in a like-kind property. The benefit to you is that your money continues to compound and build over time. You can even continue deferring those taxes over time by arranging 1031 exchanges every time you wish to see your property.

1031 Intermediary Services

A qualified intermediary can advise you on your exchange, answer any lingering questions you might have, and prepare your 1031 exchange documents so you are ready for closing. The qualified intermediaries at Commercial Partners Exchange Company have two decades of experience facilitating exchanges of real property. Contact us today to see if your property qualifies for a 1031 exchange and start saving money by deferring your capital gains taxes on your next real estate sale.

  • 1031 Hotline: 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

Should I do a 1031 Exchange in 2018?

1031 Exchange in 2018

Section 1031 of the Internal Revenue Code has been around for many decades and taxpayers have been availing themselves of the benefits of the 1031 exchange for just as long. But with the recent tax law, many people want to know if 2018 is a good year to conduct a 1031 exchange. In this article, we’re going to discuss whether or not it’s a good time to do a 1031 real estate exchange in 2018.

Conducting a 1031 Exchange in 2018

Whether or not you should do a 1031 exchange is heavily dependent on your particular situation, property, and goals. It’s always a good idea to discuss the potential of exchanging your property with a qualified intermediary to determine if you are a good candidate.

That being said, 2018 is a great year to conduct a 1031 exchange! The new tax law that went into effect earlier this month preserves the like-kind exchange. Some taxpayers were worried that the new bill would eliminate the 1031 exchange. Thankfully, that did not happen. As a result, investors big and small can continue to reap the benefits of the 1031 exchange when selling real estate.

Like-Kind Real Estate Exchange Company

If you’re thinking of selling real estate, but are concerned about the capital gains taxes of the sale, a 1031 exchange may be the best option for you! By moving all of your net proceeds into a new replacement property, a like-kind exchange allows you to defer your capital gains taxes and keep your money compounding and building over time. At Commercial Partners Exchange Company, our qualified intermediaries have been assisting clients with like-kind exchanges for decades. Contact us today to see if a 1031 exchange is right for you!

  • 1031 Hotline: If you have questions about 1031 exchanges in 2018, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

Tips for Making Sure Your 1031 Property is Like-Kind

Like-Kind Property

If you know anything about 1031 exchanges, you’ve probably heard the term “like-kind.” In this article, we are going to share a few tips for making sure your 1031 exchange replacement and relinquished property is like-kind.

The Importance of Like-Kind

The like-kind rule is one of the most important regulations that govern the 1031 exchange of property. There’s a reason 1031 exchanges are often called like-kind exchanges. Basically, section 1031 states that your relinquished property and your replacement property both need to be like-kind in order to qualify for a 1031 exchange.

Consult with a Qualified Intermediary

If you are at all confused about what does and does not constitute like-kind property, contact a qualified intermediary who specializes in like-kind exchanges. Among other things, a qualified intermediary can answer all of your questions regarding like-kind property, and even advise you on what types of property to identify in your exchange.

Be Extra Careful with Personal Property

Like-kind has a pretty broad definition in real estate exchanges. However, the same is not true for exchanges of personal property, which have a much narrower definition of like-kind. In a real estate exchange, you can exchange pretty much any real estate for any other real estate (so long as it satisfies the other 1031 exchange rules). With personal property, your relinquished and replacement property needs to be very similar. For example, you can exchange an airplane for another airplane, but not for a fleet of trucks.

Minneapolis 1031 Exchange

Jeff Peterson has been facilitating 1031 exchanges of real and personal property for decades. Whether you’re selling a piece of commercial property, or a valuable piece of art, a 1031 exchange may help you defer capital gains taxes on the sale of your property. Contact Commercial Partners Exchange Company today to learn more about the 1031 exchange process and how you can benefit!

  • 1031 Hotline: If you have questions about like-kind property in a 1031 exchange, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved