What Real Estate Attorneys Need to Know about 1031 Exchanges

It’s important for real estate attorneys to know the like-kind exchange process and the associated benefits. In this article, we are going to discuss what real estate attorneys need to know about 1031 exchanges in order to better advise their clients.

1031 Exchange Process & Benefits

Every real estate attorney should have a basic understanding of the 1031 exchange process and its benefits. Here is a quick and easy breakdown of the like-kind exchange process:

• A taxpayer sells a piece of real estate (the relinquished property).

• Within 45 days of selling the relinquished property, the taxpayer identifies new replacement property.

• Within 180 days of selling the relinquished property, the taxpayer reinvests their sales proceeds into the new replacement property.

When done correctly, this process ensures that the taxpayer will defer their capital gains taxes on the sale.

Partner with a Qualified Intermediary

The best course of action you can take is to partner with a qualified intermediary when dealing with a 1031 exchange of real estate. Qualified intermediaries understand section 1031 (as well as various relevant private letter rulings by the IRS) inside and out. They are your go-to resource for all things 1031 exchange, and your best bet for guiding your client in the right direction. Reach out to a qualified intermediary today to get a better understanding of the process.

Defer The Tax – Maximize Your Gain!

A 1031 exchange of real estate allows you to defer your capital gains taxes when selling real estate as long as you reinvest your sales proceeds into a new replacement property. This allows you to maximize your gain in the most tax-advantageous arrangement possible. The qualified intermediaries at CPEC1031 have twenty years of experience working on like-kind exchanges of real property. Let us help you through the exchange process. You can find us at our offices in downtown Minneapolis, or at one of our satellite offices 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

Qualified Opportunity Fund – Advantages vs. Disadvantages

Qualified opportunity funds exist as an alternative method for deferring capital gains taxes. QOFs were created by Congress to encourage investors to move their money into economically challenged areas. In this article, we are going to talk about the advantages and the disadvantages of qualified opportunity funds.

Advantages of Qualified Opportunity Funds

Qualified opportunity funds offer investors the ability to defer capital gains taxes on the sale of real estate, businesses, stocks, etc. by moving those gains into a qualified opportunity fund. If you hold your investment for 5 years, 10% of your gains will be forgiven. If you hold your investment for 7 years, another 5% of your gains will be forgiven.

Disadvantages of Qualified Opportunity Funds

The biggest disadvantage of a qualified opportunity fund is the looming deadline of 2026. Barring any future changes, any tax-deferral you have availed yourself of in a qualified opportunity zone will come due on December 31, 2026. As a result, it may be more advantageous to defer your capital gains taxes in a 1031 exchange, which has no hard deadline. With 1031 exchanges you can theoretically continue exchanging into new replacement property and defer your taxes indefinitely.

Minneapolis Like-Kind Exchanges

If you’re searching for an experienced, reputable company to handle your like-kind exchange of real estate, you’ve come to the right place! CPEC1031 has been facilitating real estate exchanges for more than twenty years. Our qualified intermediaries can help you through every stage of the 1031 process – answering your questions and advising you each step of the way. Contact us today at our Minneapolis office to learn more about our services and discuss the details of your real estate 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

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