How to Take the First Step in the 1031 Exchange Process

Diving into a 1031 exchange of real estate can be a daunting task – especially for those who have never done a 1031 before. But it’s actually a pretty straight-forward process. In this article, we are going to explain how to take that first step in starting the 1031 exchange process for your property.

First – Talk to a Qualified Intermediary

The first thing you need to do is find a qualified intermediary. 1031 intermediaries are well-versed in all aspects of section 1031 of the Internal Revenue Code. They will be able to advise you on the process, your best options, and facilitate the exchange for you. Involving a qualified intermediary early in the process is key to ensuring a smooth exchange. Before you begin the required paperwork of a 1031 exchange, your intermediary will have a discussion with you about the property you’re selling and whether or not you are a good candidate for 1031. Here are some of the questions they may ask during this initial phase:

• What is the nature of your relinquished property? Is it held for personal use, or investment purposes?

• What is the value / equity / debt on your property?

• How do you own the property? As an individual, or through a business entity?

• When do you intend to close on the property?

CPEC1031

At CPEC1031, we have more than two decades of experience helping investors of all sizes with their like-kind exchanges of real estate. We can put that experience to use on your exchange by helping guide you through the process and ensure that you have everything taken care of. Contact our intermediaries to chat about your exchange today. Our main office is located in downtown Minneapolis, but we serve the entire state of Minnesota, as well as the greater 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

1031 Exchange vs. Traditional Sale

When you are looking to sell real estate, you have a few options at your disposal. In this article, we are going to look at the differences between a 1031 exchange and a traditional sale – and the various benefits of each.

Traditional Real Estate Sale

In a traditional sale of real estate, the seller is paid the sales price of the property and is responsible for paying capital gains taxes on the net proceeds from the sale. This can add up to a sizable tax bill and even deter people from selling their real estate at all.

1031 Exchange of Real Estate

A 1031 exchange allows the owner of real estate to defer these capital gains taxes by moving their net proceeds into a replacement property. This keeps your money working for you in a continued investment and helps you circumvent a potentially huge tax burden.

But remember, not all real estate can be used in a 1031 transaction. Only real estate that is held for investment or business purposes are eligible. That means you personal home or primary residence does not qualify.

Minnesota 1031 Exchange Company

CPEC1031 is a Minnesota-based 1031 exchange facilitator. We work with clients across the United States and help them defer their capital gains taxes when selling real estate. Our qualified intermediaries can help prepare all of your required documents, advise you on replacement properties, and answer any questions you have along the way. Reach out to our 1031 exchange professionals today to learn more about our like-kind exchange services and how we can help you save money on taxes.

• 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

Types of Real Property that can be 1031 Exchanged

Last year, the Tax Cuts & Jobs Act went into effect and significantly narrowed the types of property eligible for 1031 exchange. Specifically, this Act excluded personal property outright and left only real property eligible for 1031 treatment. Within the realm of real estate, the like-kind definition is quite broad. In this article, we are going to talk about the various types of real property that qualify for 1031 exchange treatment.

Like-Kind Real Property

When it comes to 1031 exchanges, the term “like-kind” property generally refers to the character or nature of the property – rather than its quality or grade. All real estate involved in an exchange must be held for investment or for productive use in a trade or business. Here are some examples of like-kind real estate that can be exchanged in a 1031 transaction:

• Real Property (both improved or unimproved)

• A Duplex for a Commercial Property

• An Apartment Building used for Single-Family Rentals

• Commercial Building

• Fee for a Leasehold Interest

• Rental Resort Property

Commercial Real Estate Exchanges

At CPEC1031, we work with investors of all sizes on their 1031 exchanges of real property. With twenty years of experience at our backs, we can walk you through the entire like-kind exchange process and keep you informed every step of the way. Contact us today to learn more about our 1031 exchange services and start saving money on your real estate transaction! You can find us at our office in downtown Minneapolis. We also 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

A Few Tips to Cut Your Capital Gains Tax Burden when Selling Real Estate

Capital gains taxes are at the top of mind for many real estate investors. In this article, we are going to offer up a few tips for cutting your capital gains tax burden when selling real estate.

Qualified Opportunity Funds

Qualified opportunity funds are a new method for deferring capital gains taxes. When selling a piece of real estate, you can move your sales proceeds into a qualified opportunity fund and defer your capital gains tax burden. However, be aware that these capital gains taxes will come due come December 26, 2026.

1031 Exchanges

1031 exchanges are perhaps the best tool for reducing your capital gains taxes when selling a piece of investment real estate. By setting your transaction up as a 1031 exchange, you can defer your capital gains taxes on the sale and reinvest those proceeds into a bigger, better replacement property. The benefits are numerous – you get to avoid a tax bill and keep your money working for you in a continued investment.

Reduce Your Capital Gains Tax Burden with a 1031 Exchange

CPEC1031 works with investors large and small on their like-kind exchanges of real property. With twenty years of experience working in the 1031 exchange industry, we have the skills needed to assist you in your real estate transaction. Reach out to our 1031 exchange professionals today at our offices in downtown Minneapolis. Let us help you through the complex 1031 exchange process so you can save on capital gains taxes when you sell real estate!

• 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 1031 Exchanges Can Help Build & Benefit Communities

Many people are critical of section 1031 and argue that it is essential a mechanism for dodging taxes. However, section 1031 is not a tax-dodging tool (it only defers taxes that must be paid at a later date). In fact, section 1031 is extremely beneficial for building communities. In this article, we are going to discuss how 1031 exchanges of real estate can help build and benefit communities.

1031 Exchange Benefits for Communities

There are many ways that 1031 exchanges help build and benefit communities. Here are a few:

• They allow capital to flow more efficiently into different segments of the market.

• They encourage savings and investment in the US economy.

• They stimulate the economy and help create jobs.

The Other Side of the Argument

Opponents of section 1031 argue that 1031 exchanges allow investors to avoid paying capital gains taxes that would otherwise go to the federal government. This is true, but also a bit short-sighted. If 1031 exchanges were abolished tomorrow, investors would be forced to pay capital gains taxes on their real estate sales. However, this would also discourage investors from selling in the first place. 1031 exchanges are beneficial in the long-run because the encourage investors to keep reinvesting their capital into new property – thus benefiting their communities.

Get Help with Your 1031 Exchange

If you are looking for help with your 1031 real estate exchange, you’ve come to the right place! The qualified intermediaries at CPEC1031 have over two decades of experience helping clients through the ins and outs of the like-kind exchange process. We have the knowledge and the expertise needed to ensure the success of your transaction. Contact us today at our downtown Minneapolis office to learn more. We work with clients in Minnesota and across 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