Does Your Property Qualify for 1031 Exchange Treatment?

The first thing you need to do when considering a 1031 exchange is to figure out whether or not your property qualifies for 1031 exchange treatment. In this article, we are going to talk about how to determine whether or not your property qualifies for 1031 exchange treatment.

Is it Like-Kind Real Property?

1031 exchanges only apply to like-kind real property. With the implementation of the Tax Cuts and Jobs Act, personal property exchanges are no longer allowed.

Are You Holding it for a Qualifying Purpose?

You also need to hold your property for a qualifying purpose. Specifically, you need to hold your property for investment or business purposes. You cannot exchange property held primarily for personal use. That means your primary residence is excluded from 1031 treatment.

Does Your Property Pass the Napkin Test?

You need to make sure that the property you are exchanging into is greater than your relinquished property in terms of equity, value, and debt (this is called the napkin test).

Save Money on Taxes with a Like-Kind Exchange

A like-kind exchange is your ticket to owing fewer capital gains taxes when you sell investment real estate. At CPEC1031, we have more than two decades of experience facilitating 1031 exchanges of all shapes and sizes. We have the experience needed to ensure the success of your exchange. Contact us today to discuss your 1031 exchange options. We are located in the heart of downtown Minneapolis, and also serve the entire state of Minnesota as well as the entire 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

3 Things Everyone Should Know About 1031 Exchanges

1031 exchanges are a great tax-saving tool, but many taxpayers aren’t aware of the numerous benefits provided by this section of the Internal Revenue Code. In this article, we are going to discuss a few things everyone should know about 1031 exchanges.

Your Property Needs to Be Used for Investment Purposes

To determine if you qualify for 1031 exchange treatment, you need to first make sure that your property fits the use requirement. All property used in a 1031 exchange must be used for investment or business (not personal) purposes.

1031 Exchanges can Only be Used for Real Estate

The Tax Cuts & Jobs Act restricted section 1031 to real estate only. That means items of personal property (artwork, aircraft, etc.) can no longer be used in a like-kind exchange transaction.

You’ve Only Got 180 Days

Once you begin the 1031 exchange process by selling your relinquished property, you only have 180 days to complete your exchange.

CPEC 1031

At CPEC 1031, our team of qualified intermediaries have more than twenty years of experience facilitating like-kind exchanges under section 1031 of the Internal Revenue Code. If you’re looking to save money on capital gains taxes when selling real estate, a 1031 exchange may be the right fit for you. Contact us today to learn more about our services and experience and to set up a time to chat with our team of 1031 intermediaries. We are located in the heart of downtown Minneapolis, but also provide exchange services to clients throughout 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

How a 1031 Exchange Can Benefit Big & Small Investors Alike

Many people have heard of 1031 exchanges but assume that they are only for the big time real estate investors. Not true! Section 1031 of the Internal Revenue Code applies to all United States taxpayers. In this article, we are going to talk about how a 1031 exchange can benefit both big and small investors alike!

How to Utilize Section 1031

Section 1031 of the IRC provides U.S. taxpayers the opportunity to defer their capital gains taxes when selling investment real estate. In order to do so, you must take all of your sales proceeds and reinvest them into a new replacement property of equal or greater equity, value, and debt. It’s important to note that the benefits of section 1031 only apply to real estate that’s used for investment or business purposes. Personal property is excluded from 1031 treatment.

When done correctly, you will be able to avoid a huge tax bill and instead put that money to use in a continued investment.

Section 1031 is Available to All Taxpayers!

Section 1031 of the Internal Revenue Code is available to all taxpayers! You don’t have to be a big time real estate investor to avail yourself of the benefits of a 1031 exchange. Our qualified intermediaries can walk you through every step of the exchange process and make sure you have all your bases covered when it comes time to close on your property. Contact us today to learn more about our 1031 exchange services and to see if you are a good candidate for like-kind 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

1031 Exchange Idiosyncrasies in the State of Pennsylvania

Some states in the union have unique interpretations of section 1031 of the IRC. Pennsylvania is one such state and conducting an exchange there brings a lot of potential challenges. In this article, we are going to talk about 1031 exchanges in the state of Pennsylvania and how state tax law can impact 1031 exchange transaction.

State vs. Federal Tax Law

Section 1031 of the Internal Revenue Code deals with taxation on the federal level, which means taxpayers can do a 1031 exchange regardless of where they live in the United States. However, various states apply their own layer of taxation to 1031 exchange transactions, which can make matters even more complex.

Pennsylvania 1031 Exchanges

Pennsylvania does not recognize the deferral of gains under section 1031 for state tax purposes. That means if you sell a piece of real property in Pennsylvania you have to report all gains and pay the appropriate taxes on your state income tax form. You can, however, still benefit from federal tax deferral with your 1031 exchange.

CPEC 1031

The qualified intermediaries at CPEC 1031 have been facilitating 1031 exchange transactions for more than twenty years. We can help you through every stage of your commercial transaction – from the sale of your relinquished property to the acquisition of your replacement property. Reach out to us today to set up your exchange! You can find us at our main offices 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

Personal Use & 1031 Exchanges – Striking the Right Balance

A common question we get about 1031 exchanges is “can I use my vacation home in a 1031 exchange?” The short answer is yes, but you have to be extra careful with this type of exchange. In this article, we are going to talk about how to strike the right balance when it comes to personal use of property and 1031 exchanges.

Rental Use vs. Personal Use

When dealing with 1031 exchanges of vacation homes, you have to pay close attention to rental use vs. personal use. If you use your vacation property for personal use too much, it can disqualify you from 1031 exchange treatment. Here are a few guidelines to follow to ensure the success of your 1031 exchange of your vacation home:

• Make sure you have owned the property for at least two years prior to and after the sale.

• In the 1-year periods immediately before and after the exchange, the property must be rented to an unrelated party for at least 14 days.

• In the 1 year periods immediately before and after the exchange, the taxpayer’s personal use cannot be more than 14 days, or 10% of the days during which the property was rented.

For specific guidelines from the IRS on this topic, check out Revenue Procedure 2008-16.

Skilled Qualified Intermediaries in the Twin Cities

At CPEC1031, we specialize in 1031 exchanges of real estate. Our skilled qualified intermediaries have over two decades of experience helping clients save money on capital gains taxes. Contact us today to set up a time to chat with one of our 1031 exchange specialists. You can find us at our primary office in downtown Minneapolis or at one of our satellite offices across the country. We’re here to help you defer your capital gains taxes on the sale of 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