3 Ways to Maximize your Gain with a 1031 Exchange

A 1031 exchange allows you to defer your taxes and maximize your gain when selling real property. In this article, we are going to offer three tips for maximizing your gain and deferring your taxes with a 1031 exchange of real estate.

Exchange into a Bigger Replacement Property

One of the benchmarks of a 1031 exchange is that you need to go up in value, equity, and debt on your replacement property. This will keep your money compounding and building wealth over time in a bigger investment property.

Exchange into a Different Segment of the Market

You can also exchange into a different market segment with a 1031 transaction. The great thing about real estate exchanges is that nearly all real estate is like-kind to all other real estate. That means you could exchange out of a relinquished property in the retail market and into a replacement property in the hotel industry. This can allow you to move your money into the most advantageous market segments.

Exchange into a Less Management Intensive Property

If you own an apartment building or something else that requires a lot of management work on your part, a 1031 exchange allows you to move your investment into a less management intensive property. This is especially beneficial for older taxpayers who many not want to be as involved with their properties as they once did.

1031 Professionals in Minnesota

The Minnesota 1031 exchange professionals at CPEC1031 have two decades of experience facilitating like-kind real estate exchanges. Our team will work with you to prepare your 1031 documents, answer any questions you may have, and advise you throughout the entirety of your 1031 exchange transaction. You can rest assured that your 1031 exchange is in good hands with us. Contact us today at our downtown Minneapolis office to see if you are a good candidate for 1031 tax-deferral.

• Start Your Exchange: If you have questions about maximizing your gain with a 1031 exchange, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

4 Beneficial 1031 Exchange Options

When conducting a 1031 exchange, an exchangor has many options to consider. In this article, we are going to discuss some of the various options available to taxpayers conducting 1031 exchanges, and the benefits of each.

1031 Exchange Options

Here are some of the many options you have when exchanging 1031 property:

• An exchangor can exchange out of a property in one area, and into a property in another area, so long as both properties are within the US.

• An exchangor can exchange raw land for income-producing real property.

• An exchangor can use a 1031 exchange to consolidate multiple properties into one property that is easier to manage.

• An exchangor can exchange out of a management intensive property and into a property that has fewer management fees.

Each of these scenarios has its benefits. However, every taxpayer conducting an exchange is different and should approach their situation strategically. That’s where a qualified intermediary can really be a big help. When you hire a qualified intermediary for your 1031 exchange, they are your advisor for all things related to your exchange. They can answer all of your questions throughout the exchange process.

Minnesota 1031 Accommodators

Working with a qualified intermediary is the best way to ensure a successful 1031 exchange. At CPEC1031, our 1031 accommodators have been facilitating 1031 exchanges of real estate for decades. We have the knowledge, skills, and experience to help you through each step of your 1031 transaction – from document preparation to closing. Contact us today to speak with one of our qualified intermediaries about your like-kind exchange of real property.

• Start Your Exchange: If you have questions about 1031 exchange options, 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?

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

The Importance of Balancing Value, Equity & Debt in a 1031 Exchange

In this article, we are going to discuss the importance of balancing value, equity, and debt when it comes to 1031 exchange transactions.

Balancing Value, Equity and Debt

Typically, an Exchangor will acquire replacement property that is “up or equal” in Value (price) and will roll over all of the Equity (net proceeds) from the relinquished property into the replacement property.

Further, to the extent that the Exchangor was relieved of liabilities and debt, such as mortgages on the relinquished property, the debt relief must be offset by (1) new liabilities or mortgages taken on the conjunction with the purchase of the replacement property, OR (2) by investing additional cash in the replacement property equal to the amount of liabilities and debts that were discharged.

A QI’s Role

A Qualified Intermediary (QI) is a critical component in the success of a transaction:

• Provide a safe harbor structure to exchange transactions according to the Treasury Regulations.

• Hold proceeds from the sale of relinquished properties.

• Isolate the receipt of any taxable proceeds.

• Utilize the proceeds to purchase like-kind replacement properties.

• Prepare the required exchange documents and instructions.

Qualified Intermediary Professionals

If you are looking to defer your capital gains on the sale of real estate, your first step is to contact a qualified intermediary who can get you started with the process. At CPEC1031, our qualified intermediaries can help you through every stage of the 1031 process by advising you, answering your questions, and preparing your 1031 documents. Contact us today to speak with a qualified intermediary about your real estate transaction and see if you are a good candidate.

• Start Your 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

How A Typical 1031 Exchange Works

We get a lot of questions about how 1031 exchanges work. In this article, we are going to explain the typical process for a standard 1031 exchange of real estate.

Relinquished Property Purchase Agreement

The 1031 exchange process begins when you complete your purchase agreement for your relinquished property. The purchase agreement should state that you intend to do a 1031 exchange.

Find a Closing Company

You then need to contact a title company to close the transaction, and be sure to inform them that your transaction is a 1031 exchange.

Notify Your Exchange Company

At this point you need to notify your exchange company or qualified intermediary of the closing date, so they can prepare all the necessary documentation.

Close on the Relinquished Property

Your qualified intermediary will contact your closing agent and work with them to set up the exchange properly. This will involve the preparation of numerous closing documents.

Identify Your Replacement Property

After you close on your relinquished property, you have the next 45 days to identify in writing your new replacement property.

Replacement Property Purchase/Sale Agreement 

Similar to your relinquished property transaction, you’ll need to enter into a purchase/sale agreement for your replacement property.

Select a Closing Company

Find a title company to close your replacement property transaction and be sure to inform them that you are doing a 1031 exchange.

Close on the Replacement Property

Work with your qualified intermediary to set up the replacement property closing as a 1031 exchange.

Report Your Exchange on Your Tax Return

Finally, you’ll want to make sure to report your 1031 exchange on your tax return using IRS Form 8824.

Minneapolis Qualified Intermediary

CPEC1031 works with taxpayers large and small who want to defer their capital gains taxes on the sale of real estate. Our qualified intermediaries have decades of experience performing like-kind exchanges and will help you through every step of the 1031 exchange process, including document preparation, and advisement on replacement property. Contact us today to see if you are a good candidate for a 1031 exchange of real property.

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

Defer the tax. Maximize your gain.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved