Can Co-Ops Be Exchanged Under Section 1031?

There have been a lot of changes to section 1031 over the past year or so. With these changes come a lot of questions. In this article, we will discuss whether co-ops can be exchanged under section 1031 of the Internal Revenue Code.

Tax Law Changes

With the implementation of the Tax Cuts & Jobs Act in 2018, there were a lot of changes to the 1031 exchange landscape. Most notably, 1031 exchanges were narrowed to only real estate – personal property exchanges were excluded from eligibility.

With these changes in mind, do co-ops qualify for 1031 exchange tax treatment?

Co-Ops & 1031 Exchanges

The short answer is yes – co-ops can qualify for 1031 exchange treatment. The IRS has issued a ruling that co-ops are eligible for 1031 exchange because they are to be treated as real estate. This means you can exchange co-op stock in a 1031 transaction, and interest in a co-op can be treated like interest in real property.

Get Help With Your 1031 Exchange

If you’re thinking about deferring taxes with a 1031 exchange, get professional assistance from a qualified intermediary to ensure the success of your exchange. The qualified intermediaries at CPEC1031 have two decades of experience helping clients throughout the country on their real estate exchanges. We work with you from the start of your exchange all the way through to closing. Give us a call today to talk about the details of your real estate exchange. You can find us at our primary office in downtown Minneapolis.

• 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

Can You do a 1031 Exchange of Foreclosed Property?

If you are facing foreclosure on a property you own, you may be able to exchange the property and defer the capital gains taxes under section 1031 of the Internal Revenue Code. In this article, we are going to discuss whether or not you can complete a 1031 exchange of foreclosed property.

What is Your Gain on the Sale?

When facing foreclosure, it’s important to determine your gain on the sale. Remember, your gain on the sale is not the amount of cash proceeds that you may (or may not) receive. Rather, the gain is determined by calculating the difference between your adjusted basis in the property and the debt relief you will experience upon giving the property back to the lender. If your debt in the property is far above your basis, you may actually have a taxable gain on the property if you give it back to the lender.

1031 Exchange

If you find yourself in this situation, it may be better to conduct a 1031 exchange on your property in order to defer your capital gains taxes. The difficult part is that you will likely need to come up with a good amount of cash for a down payment on a replacement property. In any case, a qualified intermediary can help you determine what the best option is for you.

Like-Kind Exchange Intermediaries

At CPEC1031, we provide like-kind exchange intermediary services to clients throughout the state of Minnesota and around the United States. Our qualified intermediaries have over twenty years of experience facilitating all types of exchanges under section 1031 of the Internal Revenue Code. We bring that level of experience to the closing table with each transaction we facilitate so you can rest assured that your exchange is in good hands. Reach out to our qualified intermediaries today at our downtown Minneapolis office to chat about your 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

How Real Estate Agents Can Guide Their Clients on Like-Kind Exchanges

Real estate agents do everything they can to help their clients make informed decisions when selling or buying real property. In this article, we are going to offer some tips for how real estate agents can guide their clients through the benefits of like-kind exchanges.

Explaining the Benefits

Many real estate investors are unaware of the full scope of benefits when it comes to 1031 exchanges. It’s important for you to have a basic understanding of the 1031 exchange process and its benefits so that you can explain it to your real estate clients. Here’s a quick and easy description of the benefits of 1031 exchanges that you can use to educate your clients:

• 1031 exchanges allow you to defer the capital gains taxes on the sale of property. In order to accomplish that tax-deferral, you need to reinvest your sales proceeds into a new replacement property.

Connect with a Qualified Intermediary

Qualified intermediaries focus solely on tax-deferred exchanges under section 1031 of the Internal Revenue Code. They are your go-to source on all things 1031. If your client is interested in conducting a 1031 exchange on their property, the best thing you can do is to connect them with a trusted intermediary who can guide them through the process and ensure that their exchange is successful.

Defer Your Capital Gains Tax

CPEC1031 has twenty years of experience facilitating successful like-kind exchanges under section 1031. Our qualified intermediaries can help you navigate the sometimes rough waters of the 1031 exchange process. We can help you identify your replacement property, prepare your documents for closing, and answer all of your questions. You can find us at our office in downtown Minneapolis, but we facilitate exchanges for clients throughout the state of Minnesota and around 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

Tips for CPAs to Advise Their Clients on 1031 Exchanges

CPAs are always looking for tax strategies that can save money for their clients. The like-kind exchange is one such strategy that can be hugely beneficial. In this article, we are going to talk about how CPAs can best advise their clients on 1031 exchanges of real estate.

1031 Considerations for Your Clients

From a tax perspective, 1031 exchanges can provide huge benefits to your clients who are looking to sell real estate. A like-kind exchange allows a taxpayer to defer capital gains tax on the sale of investment real estate, as long as the net proceeds are reinvested into a new replacement property.

If your client is looking to sell a piece of investment real estate, be sure to tell them about the 1031 exchange option and how it can save them a lot of money in capital gains taxes.

Confer with a 1031 Professional

1031 exchanges come with a lot of ins and outs that can significantly complicate matters quickly. When dealing with a 1031 exchange, it’s always a good idea to consult with a qualified intermediary who knows section 1031 top to bottom. We often work with CPAs to help them advise their clients on the best course of action with 1031 exchanges. We’d be happy to help you provide the best possible tax advice to your clients.

Exchange Your Real Estate & Defer Your Taxes

If you’re in the market to sell commercial real estate, consider a 1031 exchange to defer the capital gains taxes on your sale. The qualified intermediaries at CPEC1031 have been facilitating commercial real estate 1031 exchanges for more than two decades. We bring this level of experience to the table with every like-kind exchange we facilitate. Contact us today to learn more about our 1031 exchange services and let us help you get your like-kind real estate exchange off the ground. Our main office is located in Minneapolis, MN.

• 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

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

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