Items You Need to Start a 1031 Exchange

Many taxpayers have heard of the tax-saving benefits of 1031 exchanges, but don’t know where to begin. Here’s what you need to start a 1031 exchange of real estate or personal property.

Contact A Qualified Intermediary

First thing’s first, contact a qualified intermediary! This should be the first step in any 1031 exchange. Your intermediary will advise you on the details of your exchange, answer your questions, and request all the required information from you to compile the 1031 exchange documents.

Provide Your Information to Your Intermediary

After you have contacted your intermediary, you should start compiling information regarding your transaction. Your qualified intermediary will need all of the following information to begin your exchange:

• Your personal identification information. Your name, SSN, and contact information.

• The name and contact information of your title company.

• Copies of the purchase agreement and title report.

Using this information, your qualified intermediary will begin drafting your 1031 exchange documents and have these ready when you close on your replacement property.

Identification of Replacement Properties

Once you’ve completed the sale of your relinquished property, it’s time to identify your replacement properties in writing. Your qualified intermediary will help advise you on replacement properties and help prepare the required identification forms.

Twin Cities Qualified Intermediaries

If you are selling real estate, consider deferring your capital gains taxes with a 1031 exchange. With decades of experience, CPEC1031 is the go-to for your like-kind exchange needs. Contact our Twin Cities qualified intermediaries today to discuss the details of your exchange. Our main office is located in downtown Minneapolis, but we help clients throughout the state of Minnesota and the rest of the country. Defer your taxes and maximize your gains by starting your 1031 exchange today!

• Start Your 1031 Exchange: If you have questions about items you need to start 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

Why You Can’t 1031 Exchange a Primary Residence

In general, you are not allowed to 1031 exchange property that is considered your primary residence.  But why is that the case? In this article, we are going to explain why you can’t do a 1031 exchange of your primary residence – with a few examples to illustrate.

Primary Residence Examples

1031 exchanges only apply to property that is held for business or investment purposes. Your primary residence is excluded outright from 1031 treatment. Often, the best way to illustrate a particular 1031 exchange rule is through examples. Here are a couple examples of situations in which you would not be able to conduct a 1031 exchange of a primary residence:

• Moving. If you move from Minnesota to Wisconsin and you sell your home (your primary residence), you cannot exchange this primary residence for another new primary residence in Wisconsin.

• Getting Married. If you get married and move into your partner’s home, you cannot exchange your previous primary residence for a vacation property.

These are just a few examples that explain why you typically cannot exchange primary residences in a 1031 transaction. Section 1031 applies to property that is held for use in your trade or business.

Twin Cities 1031 Exchange Services

Considering a 1031 exchange of real property? Contact a skilled qualified intermediary today to discuss your options. Our Twin Cities 1031 exchange company has been assisting real estate investors with their 1031 exchanges for decades. Give us a call today with any questions about the 1031 exchange process, or to get your own exchange set up so you can realize the tax-saving benefits of a like-kind exchange.

• Start Your Exchange: If you have questions about 1031 exchanges of residential property, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved

If I Already Signed a Contract to Sell the Relinquished Property, Can I Still Do a 1031 Exchange?

Timing is important in any 1031 exchange of real estate. With any exchange, you have 180 days to complete your exchange after you sell your relinquished property. But can you still do a 1031 exchange if you have already signed a contract to sell your relinquished property? That’s our topic for this article.

Setting up a 1031 Exchange at the Last Minute

The answer to the question at hand depends on the timing of your transaction. If you have already closed on the sale of your relinquished property, it is too late to set up a 1031 exchange – even if you have not yet cashed the proceeds check.

However, if you have not yet transferred the benefits and burdens of your property, it is not too late to set up a 1031 exchange. You can still call a 1031 exchange qualified intermediary, and have them set up the exchange prior to closing so you can realize the tax-deferral benefits of a like-kind exchange.

Minnesota Real Estate Exchanges

If you are interested in doing a 1031 exchange but you’ve already signed a contract to sell your property, don’t hesitate to contact a 1031 exchange company as soon as possible. As long as you haven’t closed yet, there is still time to put together the required documents for a 1031 exchange. The qualified intermediaries at CPEC1031 have been helping people with their real estate exchanges for decades. Contact us today at our downtown Minneapolis office to set up your exchange.

• Start Your Exchange: If you have questions about 1031 exchange timelines, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved

Does a 1031 Exchange Eliminate Capital Gains Taxes?

But many people incorrectly believe that a 1031 exchange completely eliminates capital gains taxes on the sale of property. In this article, we are going to explain why that’s not the case, and what benefits a 1031 exchange can actually bring to a real estate transaction.

Tax Elimination vs. Tax Deferral

So do 1031 exchanges completely eliminate capital gains taxes when you sell a piece of property? The short answer is no – a 1031 exchange does not completely eliminate capital gains taxes from the sale of real or personal property. What a 1031 exchange does is defer those capital gains taxes.

When you sell a piece of real estate, typically you are responsible for paying capital gains taxes on the sales proceeds. A 1031 exchange allows you to avoid that potentially large capital gains tax bill by moving your net proceeds into a like-kind investment property.

While a 1031 exchange does not completely eliminate your capital gains taxes, you can effectively keep them at bay by continuing to exchange out of and into like-kind property. Ideally, you can continue deferring your taxes (and allowing your money to compound and build wealth over time) until you die.

Start Your 1031 Exchange

A like-kind exchange can present a lot of challenges and complications if you don’t know what you’re doing. Having a qualified intermediary on your team can be the difference between a successful and a failed exchange. At CPEC1031, our team of qualified intermediaries has been helping taxpayers with their like-kind exchanges for decades. We have the experience and the knowledge to help you through your exchange. Start your 1031 exchange today by reaching out to one of our qualified intermediaries.

• Start Your 1031 Exchange: If you have questions about tax deferral through section 1031, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved

The 4 Most Important Rules to Follow for a Successful 1031 Exchange

There are many rules and guidelines that need to be followed to realize the tax saving benefits of a 1031 exchange. In this article, we are going to walk through the four most important rules you need to follow to ensure a successful 1031 exchange.

Like-Kind Property

All of the property involved in your 1031 exchange (your replacement property and your relinquished property) needs to be like-kind in nature. With real estate, like-kind covers most types of real estate – as long as it abides by the other rules on this list.

Qualifying Purpose

You need to have the right mindset or qualifying purpose with the property you are exchanging out of and into. Specifically, that means your property must be held for investment or business purposes. You cannot exchange property that you hold primarily for personal use, such as your primary residence.

180 Days

You have to complete your 1031 exchange within 180 days total, starting after you sell your relinquished property. You have the first 45 of those days to identify your replacement property. If you do not finish your exchange by the 180th day, your exchange will fail.

Equity, Value, Debt

Finally, you want to make sure you are exchanging into a property of equal or greater value, equity, and debt compared to your replacement property.

Minneapolis Like-Kind Exchange Company

The qualified intermediaries at CPEC1031 have decades of experience helping taxpayers throughout the Minneapolis / St. Paul metro area with their 1031 exchanges. We work one-on-one with each client to address their unique situation. Our 1031 exchange accommodators will answer all of your questions, advise you on 1031 rules and regulations, and prepare all of your documents for the closing. Contact us today to speak with a qualified intermediary who can help you get your exchange of like-kind property off the ground!

• Start Your 1031 Exchange: If you have questions about 1031 exchange rules, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved