Year-End 1031 Exchange Tips

2018 is coming to a close and with it, so are many 1031 exchanges. This article offers some year-end tips for your 1031 exchange of real estate.

Remember Your Deadlines

It’s always important to be aware of your 1031 exchange deadlines. As a quick reminder – you have 180 days total to complete your 1031 exchange, with the first 45 of those days being set aside for replacement property identification.

Don’t Forget About the New Rules

There was a big change-up in the 1031 exchange universe in 2018. The Tax Cuts and Jobs Act preserved like-kind exchanges of real estate, but eliminated 1031 exchanges of personal property. If you were hoping to exchange your art, gold coins, business equipment, or other items of personal property, I’m afraid that’s no longer in the cards.

Consult with Your CPA

No one knows your unique tax situation better than your CPA. It’s a good idea to consult with them if you are considering a 1031 exchange. They will be able to offer you guidance as to when you should do the exchange and how an exchange can fit into your tax strategy.

1031 Exchange Accommodators

If you are considering a 1031 exchange of your real estate, a third-party administrator can help you through the process and ensure your exchange is a success. The intermediaries at CPEC1031 have more than two decades of experience assisting taxpayers with their like-kind exchanges. We bring that level of experience to each and every transaction – so you can rest assured you are in good hands with us. Contact our like-kind exchange professionals today to get your exchange started.

• 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

A Reminder About 1031 Exchange Limitations

Earlier this week, the IRS issued a reminder to taxpayers about the limits of 1031 exchanges.  It seems that some may still be unaware of the recent changes to 1031 exchanges brought on by the Tax Cuts and Jobs Act. In this article, we are going to offer a quick reminder about the recent 1031 exchange limitations.

A Quick 1031 Refresher Course

There was a big change in the 1031 exchange industry in 2018. The Tax Cuts & Jobs Act, which passed in late 2017 and went into effect in early 2018, restricted 1031 exchanges to like-kind real property only. Prior to the TCJA, items of personal property could be exchanged under section 1031, as well as real estate. This is now a bygone era.

If you have been intending to conduct a 1031 exchange of personal property – think again. Such an exchange will not be recognized by the IRS and you will end up recognizing your capital gains on the sale.

That being said, 1031 exchanges of real property are still a viable and advantageous option for taxpayers. If you’re considering selling investment real estate, you can still avail yourself of the tax-saving benefits of a 1031 exchange.

CPEC 1031

At CPEC1031, our qualified intermediaries have more than two decades of experience working with clients throughout the country on their real estate exchanges under section 1031 of the Internal Revenue Code. We can help you through every stage of the exchange process – answering your questions and advising you throughout the proceedings. Contact us today to set up a time to chat with our 1031 exchange professionals at our downtown Minneapolis office.

• 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

Avoiding Improper “Basis Shifting” in a 1031 Exchange

In this article, we are going to define “basis shifting” in a 1031 exchange and how to avoid improper basis shifting in your exchange.

What is Basis Shifting?

Basis shifting is a term that crops up in 1031 exchanges involving related parties. As we’ve discussed before, related party 1031 exchanges come with their own set of rules, which are set in place to prevent related parties from taking advantage of the system. When a 1031 exchange happens between related parties, the party receiving the replacement property must hold onto that property for a minimum of 2 years.

Basis shifting between related parties essentially works like this:

• A taxpayer with a high-cost basis property finds a related party with a low-cost basis property.

• The two related parties engage in a direct swap 1031 exchange – effectively shifting the cost-basis of both related parties.

• Two years later, the taxpayer then sells their relinquished property – taking advantage of their lower cost basis in the property.

This type of scenario has been ruled a violation of section 1031 and should be avoided.

1031 Exchange Process

CPEC1031 specializes in all things related to section 1031 of the Internal Revenue Code. Our qualified intermediaries have been working on 1031 exchanges of real property for over two decades and have a comprehensive understanding of the 1031 exchange process. We can walk you through each and every step of the 1031 process. Give us a call today to discuss the details of your 1031 exchange. Our primary office is located in downtown Minneapolis, but we work with clients throughout the United States.

• 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

How to Reap the Benefits of a 1031 Exchange

There are many benefits to doing a 1031 exchange of real estate. In this article, we are going to talk about how you can reap the most benefits from your 1031 exchange of real estate.

The True Benefit of 1031 Exchanges

The true benefit of a 1031 exchange is that it allows the taxpayer conducting the exchange to defer their capital gains taxes when selling real estate. These taxes that would have gone to the government in an outright sale, can then be reinvested in a replacement property – which keeps your hard earned money working for you in a continued investment.

Keep Reaping

Once you have completed your 1031 exchange and successfully deferred your taxes by reinvesting your net proceeds into replacement property, there’s no reason to stop! You can keep reaping the benefits of section 1031 for the rest of your life by continuing to exchange your property rather than selling it in an outright transaction. This way you can keep deferring your taxes indefinitely – reaping the benefits offered by section 1031 until you die.

1031 Exchange Transactions

With two decades of experience working on 1031 exchange transactions, the team at CPEC1031 has all the necessary skills to ensure your exchange is successful. We can prepare all of your 1031 documents, answer all of your questions, and advise you on important decisions. Contact our team of intermediaries today at our office in downtown Minneapolis. We serve the state of Minnesota, as well as the rest of the United States so give us a call no matter where your property is located!

•  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 Exchange: Can I Sell Investment Real Estate & Buy Precious Metals?

This is perhaps the most common question we get regarding 1031 exchanges. With the passage of the Tax Cuts & Jobs Act, only real property can now be exchanged for other like-kind real property.

Here is the specific text from section 1031 itself:

In general, No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.

CPEC1031 in Minneapolis, MN

At CPEC1031, we have been providing like-kind exchange services to clients throughout the Twin Cities and greater Minnesota for decades. Our qualified intermediaries can help you throughout the entirety of your 1031 exchange. We can advise you on replacement property, prepare your 1031 exchange documents, and answer all of your questions along the way. Contact us today to learn more about the services we offer and how we can help you defer taxes 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