1031 Exchange Score Card

When you are thinking of doing a 1031 exchange, it is important to look at some key items of information. For your relinquished property here are the details to drill-down on and to gather together:

• VALUE: what is the value of the relinquished property – what would the estimated gross sales price be?

• TRANSACTION COSTS: what are the estimated costs of the sale such as commissions, title closing charges, recording fees and state deed tax – and this will help you guesstimate your net selling price or actual amount realized on a potential sale.

• DEBT: What is the remaining debt on the relinquished property – how much do you have in outstanding loans (including any pre-payment penalties)?

• BASIS: What is the current adjusted basis of the relinquished property?

• FEDERAL AND STATE TAX LIABILITY: How much would you pay in deprecation recapture (max 25%), normal capital gains (max 20%), Net Investment Income Tax (max 3.8%), and State of Minnesota income tax (max 9.85%) – so you know what the tax bill would be on a fully taxable transaction (if you did not conduct a 1031 exchange)?

Once you have the information, you can make a very informed decision and decide what type of replacement property investment is best for your situation.

• 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 1031 Exchanging Conservation Easements

When it comes to 1031 exchanges, there is a persistent question of “does my property qualify” for 1031 treatment? In this article, we are going to discuss the complexities of 1031 exchanges of conservation easements. Do conservation easements qualify for 1031 exchange treatment?

What is a Conservation Easement?

First of all, let’s briefly define what we mean when we say conservation easement. Simply put, an easement grants a person the right to enter, cross, or use another person’s property. A conservation easement is an easement used primarily for conservation purposes. For example, a farmer who owns a large tract of land may grant the government or a conservation organization an easement to utilize a portion of their land for conservation purposes. The farmer would be paid for use of the land, and the organization would be able to use it for conservation purposes.

1031 Exchange Considerations

But what if the farmer wants to 1031 exchange this land with the conservation easement? IRS private letter rulings have generally supported the use of conservation easements for 1031 exchange purposes. However, 1031 exchanges of conservation easements can also depend heavily on state laws defining the purpose of the easement. Consult with your 1031 exchange intermediary about your specific situation.

Contact a Qualified Intermediary

Before you embark on a 1031 exchange of real estate it’s important to consult with a qualified intermediary who can explain your options and walk you through the process. The qualified intermediaries at CPEC1031 have twenty years of experience working on like-kind exchanges of real property. We can prepare all of your required documentation, help you find replacement properties, and more. Contact us today to set up a time to chat with one of our qualified intermediaries 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

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