Why It May Not Be a Good Idea to Sell Investment Property that’s Increased in Value

When you’re sitting on an investment property that has skyrocketed in value, selling may be at the top of your mind. But this might not be your best course of action. In this article, we are going to explain why it’s not always a prudent idea to sell an investment property – even when it’s increased in value.

Consider Your Capital Gains Tax Burden

If you’ve owned an investment property for a number of years and it has significantly increased in value it can be quite tempting to sell the property and pocket the net proceeds. This is especially true to seniors who are entering retirement and want to have some additional liquidity. However, what many don’t think about until it’s too late is the tax burden inherent in selling an investment property. The more your property has increased in value, the more capital gains taxes you’re going to have to pay when you sell it.

Consider a 1031 Exchange

A tax-advantageous alternative to selling your property is to exchange it using section 1031 of the Internal Revenue Code. Such an exchange allows you to defer your capital gains tax burden when selling investment property, so long as you reinvest your sales proceeds into a replacement property. This keeps your money working for you in an investment and allows you to avoid a hefty tax burden.

1031 Exchange Intermediaries

If you are struggling with your 1031 exchange, you’ve come to the right place. With two decades of experience in the 1031 exchange industry, CPEC1031 has the skills and expertise needed to ensure your exchange is a success. Whether you’re looking at a forward exchange, a reverse exchange, or a build-to-suit construction exchange, we are here to help. Contact us today at our office in downtown Minneapolis to learn more about our capabilities and to set up a time to chat with one of our skilled 1031 intermediaries.

• 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 Qualifying Your Vacation Property for 1031 Exchange

Many investors wonder whether or not their vacation property qualifies for 1031 exchange. The answer is – it depends. Vacation property can qualify for 1031 exchange, but there are strict benchmarks you must hit in order for it to qualify. In this article, we are going to offer up some tips for qualifying your vacation property for 1031 exchange treatment.

How to Prepare Your Vacation Property for a 1031 Exchange

If you’ve got a vacation home that you want to convert into a rental property in preparation for an eventual 1031 exchange, here are some tips for doing so:

• Lease the vacation property as much as possible and keep written records of all leasing activities.

• Restrict your personal use of the property to a minimum. The benchmark for 1031 exchange is that the property can only be used personally for less than two weeks per year, or less than 10% of the days that the property is rented.

• List the property on popular rental websites like VRBO.

• Hire a property management company to manage the rental of the property.

• Show rental income and expenses on Schedule E of the property owner’s tax return.

CPEC1031 – Minneapolis, MN

CPEC1031 – based in Minneapolis, MN – is your one stop shop for all things related to 1031 exchanges. With two decades of experience facilitating exchanges across multiple industries, our qualified intermediaries are well-equipped to help you navigate the details of your 1031 exchange. Reach out to our 1031 exchange professionals today to set up your like-kind exchange. Our main office is in downtown Minneapolis, but we work with clients throughout Minnesota, as well as 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

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