Can You 1031 Exchange Property in Two Different Industries?

1031 exchanges are very versatile and allow you to exchange out of and into different market segments. In this article, we are going to talk about how you can 1031 exchange from one industry into another.

Like-Kind

When it comes to 1031 exchanges, one of the most important rules you need to follow is that all property involved needs to be like-kind. Thankfully, the term “like-kind” in the realm of real estate is very broadly construed. Nearly all qualified real estate is considered like-kind to all other qualified real property. That means you can do a like-kind exchange from a relinquished property in one industry into a replacement property in a completely different industry – so long as you meet all the other requirements.

An Example

Let’s say you own an apartment complex and you are interested in selling that property and getting into another market segment. You could sell your apartment complex in a 1031 transaction, and roll your sales proceeds into a hotel (your replacement property). This showcases the versatility of the 1031 exchange.

1031 Exchanges in St. Paul, MN

1031 exchanges offer a fantastic way to defer your capital gains tax when you sell real estate. Instead of writing a check to the government, you can move your hard-earned money into a continued investment and keep your money working for you over time. At CPEC1031our qualified intermediaries have over twenty years of experience facilitating 1031 exchanges of all shapes and sizes. Contact us today to set up a time to chat about your 1031 exchange and see how we can help you save money on your next real estate 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

Now is the Perfect Time to Learn About 1031 Exchanges

The real estate market is hot, and it’s a great time to sell real property, but that can also mean more taxes. In this article, we’re going to talk about why now is the perfect time to learn more about section 1031 of the Internal Revenue Code.

Hot Seller’s Market

The real estate market is very hot right now, which is a great thing for sellers whose properties have increased in value. However, there are two sides to every coin. If your property has increased in value and you sell it for a high price, your capital gains taxes on the sale of that property are also going to be high. That means one thing – a bigger tax bill.

Avoiding a Tax Bill

If you want to avoid a big tax bill, as I imagine most investors do, a 1031 exchange can help! Using a like-kind exchange, you can defer your capital gains taxes on the sale of real estate. That being said, you are required to meet certain requirements outlined by the IRS in order for your exchange to succeed. You need to complete your exchange within 180 days, your property needs to qualify for 1031 treatment, and you have to exchange into like-kind property.

Like-Kind Intermediaries

At CPEC1031, your 1031 exchange is our business. With more than twenty years of experience, our qualified intermediaries have the skills and experience needed to guide you through the avenues of the like-kind exchange process – from the sale of your relinquished property, to the purchase of your replacement property. Contact us at our office in downtown Minneapolis to discuss the details of your exchange and start the tax-deferral process 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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchanges for Beginners

Anyone can do a 1031 exchange and avail themselves of the associated benefits of tax deferral. But many taxpayers are intimidated by the 1031 exchange process and assume it’s too complicated. In actuality, 1031 exchanges can be accomplished by following a few simple rules. In this article, we are going to talk about a few things that beginners should understand about 1031 exchanges.

Qualified, Like-Kind Property

Not all property is eligible for 1031 exchange treatment. The new tax law completely excludes personal property from 1031 exchange treatment. Real property also comes with several restrictions. First of all, your property needs to be held for a qualified purpose (i.e. for investment or business purposes). Furthermore, all property in the exchange needs to be like-kind.

Time Periods

You also have various time periods to keep in the back of your mind during a 1031 exchange. Your total time frame for completing the exchange is 180 days. The first 45 of those days is your identification period for identifying in writing your replacement property.

Qualified Intermediary

A qualified intermediary is a neutral third party whose job it is to facilitate your 1031 exchange. Working with an intermediary is the best way to ensure a successful exchange.

1031 Real Estate Exchange Services

At CPEC1031 our qualified intermediaries assist taxpayers in the exchange of real estate. A qualified intermediary can help you prepare all of the necessary 1031 exchange documents, advise you on your property, and answer all of your questions along the way. Reach out to us today to discuss the details of your real estate exchange. Our primary office is located in downtown Minneapolis but we work with clients all over Minnesota and across the country.

• 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

Can I Receive Any Cash Proceeds in a 1031 Exchange?

Some of the most common 1031 exchange questions we hear are about cash. In this article, we’re going to talk about the drawbacks of receiving cash in a 1031 exchange of real estate and how to defer all of your capital gains taxes.

Cash Boot

The short answer is that you want to avoid receiving cash at all costs during a 1031 exchange.

Any cash received during the like-kind exchange process is considered “boot” and is taxable. Receiving cash during the course of your 1031 exchange defeats the purpose of the exchange itself. In a like-kind exchange you want to defer all of your possible capital gains taxes. In order to do that, you need to move all of your cash proceeds into a new replacement property (and also meet various other technical benchmarks). If done correctly, you can avoid a huge tax bill when selling property.

If you do end up receiving cash during the exchange process, you can still do a partial 13031 exchange, wherein you are able to defer part of your capital gains taxes.

1031 Exchange Accommodators

1031 exchanges are a great way to save money on taxes when you sell real estate. The qualified intermediaries at CPEC1031 have twenty years of experience conducting 1031 exchanges in Minnesota and around the country. Give us a call today to get your 1031 exchange started and defer your capital gains taxes on the sale of real property. Our intermediaries are available to answer your questions and advise you on all the details of your 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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchanges & Tax Audits

1031 exchanges are closely examined in any tax audit because they are used by many investors – but a lot of people don’t follow the required rules for an exchange. In this article, we are going to talk about a few tips for dealing with 1031 exchanges when you’re being audited.

Technical Requirements

When looking at a 1031 exchange transaction, the most common red flag for an auditor is the failure to meet the technical requirements of a 1031 exchange. These include the 180 day / 45 day time periods, the like-kind property requirement, and the napkin test – to name just a few. Make sure you’re abiding by all of these technical requirements when conducting your exchange.

Maintain Your Records

The best thing you can do to protect yourself in the event of an audit is to maintain thorough and accurate records of your 1031 exchange transactions. That way you will have all the information needed when your auditor requests it. You should also consult with a 1031 exchange professional before conducting an exchange. A 1031 intermediary can explain the details of the 1031 process and provide you with good advice so your exchange does violate the rules.

Exchange Your Like-Kind Property

The team of qualified intermediaries at CPEC1031 have two decades of experience facilitating exchanges of like-kind property. Our team can help you identify replacement properties, prepare all your documents, and answer all of your questions throughout the process. Contact us to learn more about the 1031 exchange process and to get your exchange off the ground today. Our offices are located in downtown Minneapolis, but we work with clients throughout the state – as well as around the country.

• 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