The 3 Hardest Aspects of a 1031 Exchange

1031 exchanges may seem easy on the surface (and sometimes they are). But there are a lot of potential difficulties along the way. In this article, we are going to discuss the three most difficult aspects of conducting a 1031 exchange of real estate.

Making Sure Your Property Qualifies

Not all property qualifies for 1031 exchange treatment. Personal property is excluded outright. Real estate needs to be held for investment or business use in order to qualify.

Finding Replacement Property

Perhaps the most difficult part of a 1031 exchange is finding replacement property to exchange into. You only have a set time limit to do this so it’s not like you can casually search for the perfect property.

Finishing on Time

Finally, it’s important to finish your exchange within the given time limits. You only have 180 days to complete your exchange once you’ve sold your relinquished property. If you go over this deadline, your exchange will fail. You need to make sure you are prepared to accomplish all your requirements within this timeframe.

1031 Exchange Assistance

If you’re looking for assistance with your 1031 exchange, we can help. CPEC1031 has over twenty years of experience facilitating 1031 exchanges of all shapes and sizes. Our intermediaries can help you fully understand the 1031 exchange process, advise you on replacement property, and prepare all of your documentation for the closing table. Reach out to our professionals today for help with your next like-kind exchange. You can reach 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

1031 Exchange Advantages vs. Disadvantages

Advantages of a 1031 Exchange

The taxpayer may dispose of property without bringing upon oneself any immediate tax liability. This allows the taxpayer to keep the earning power of the deferred tax dollars working for them in another investment. In effect, this money can be considered an interest-free loan from the IRS. There is no interest paid on the outstanding loan balance and there is no specific due date.

The loan will be abolished upon the death of the taxpayer, which means that the taxpayer's estate never has to repay the loan. The taxpayer who is entitled by law gets a stepped-up basis on the inherited property; that is, their basis is the fair market value of the inherited property at the time of the taxpayer's death. A subsequent sale by the heirs will be taxable only to the extent of the difference between the stepped-up basis and the net sale price.

1031 exchange is highly advantageous to the taxpayer as it enables the taxpayers to sell income, investment or business property and replace with like-kind replacement property without having to pay the capital gain taxes on the transaction. Section 1031 of IRS is the basis of tax-deferred exchanges.

Disadvantages of a 1031 Exchange

The main disadvantage of 1031 exchange is that it offers a reduced basis for depreciation in the replacement property. The tax on the replacement property is calculated on the basis of the purchase price of the replacement property minus the gain, which was deferred on the sale of the relinquished property as a result of the exchange. Thus the taxpayer needs to pay tax also on the deferred gain if he cashes out of his investment.

Minneapolis 1031 Exchange Intermediaries

At CPEC1031, we work with investment real estate owners of all shapes and sizes on their 1031 exchanges. Ultimately, a 1031 exchange allows you to defer capital gains taxes when selling real estate. We make that process as easy as possible for all our clients. Contact us today to learn more about the like-kind exchange process or to get your exchange started. You can find us at our primary office in downtown Minneapolis, or at one of our satellite offices located 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

1031 Exchange Tips for Landlords

1031 exchanges can be beneficial to investment property owners for a variety of reasons. In this article, we are going to talk specifically about how 1031 exchanges can benefit landlords.

Exchange Into a Less Management Intensive Property

Being a landlord is a lot of work - from dealing with repairs, to finding and managing renters, and more.

If you’re getting on in years or you’re simply not interested in shouldering the responsibilities of being a landlord any longer, a 1031 exchange may be your golden ticket. Because you can exchange into and out of different real estate markets, a like-kind exchange allows you to exchange out of your current rental property and into a less management intensive replacement property.

Defer Your Capital Gains Taxes

Of course, the biggest incentive to conduct a 1031 exchange is to defer your capital gains taxes when selling your property. Selling a rental property in a straight forward sale can result in a heft capital gains tax burden. Why not defer those capital gains taxes and move your money into a continuing investment replacement property?

1031 Exchange Services in Minneapolis, MN

At CPEC1031, we facilitate 1031 exchanges of real estate for investors big and small. If you’re thinking of selling a piece of investment real estate but you don’t want to pay the required capital gains taxes, then a 1031 exchange may be a great option for you! Our 1031 intermediaries can walk you through the entire process and ensure that you feel comfortable and informed the entire way. Contact us today to learn more and to see if your property qualifies for 1031 exchange treatment.

• 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 Dates to Remember in a 1031 Exchange

Deadlines are extremely important in a 1031 exchange. In this article, we are going to talk about the three most important dates to remember in a 1031 exchange of real estate.

The Date of Your Relinquished Property Sale

The first date you need to keep in mind is the date on which you sell your relinquished property. Your 1031 exchange clock starts ticking the day you sell your relinquished property so it’s important to know when this is going to happen in order to properly prepare for the rest of your 1031 exchange period.

The Date of Your Replacement Property Identification Deadline

Next, you need to mark your calendar with the date of your replacement property identification deadline. Once your exchange begins, you have 45 days to identify in writing all of the replacement properties you intend to exchange into.

The Final Date of Your 1031 Exchange Period

And finally, you need to know the final date of your 1031 exchange period. You have 180 days in total to complete your 1031 exchange once you sell your relinquished property. There are a few rare situations in which your exchange period may be different – so you should always consult with a qualified intermediary on the specifics of your exchange.

CPEC1031

At CPEC1031, our specialty is 1031 exchanges. In fact, we focus solely on providing the best possible 1031 exchange services in the industry. Our qualified intermediaries have over two decades of experience working with clients throughout the state of Minnesota and beyond on their like-kind exchanges. We can help you save capital gains taxes on your next real estate sale. Contact us today at our downtown Minneapolis office to learn more!

• 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

Build-to-Suit Exchanges – What are the True Benefits?

Build-to-suit exchanges are a great alternative for people who want to conduct a 1031 exchange, but can’t find the perfect property. In this article, we are going to discuss the true benefits of build-to-suit exchanges.

How a Build-to-Suit Exchange Works

A build-to-suit exchange is similar to a typical forward 1031 exchange in that a relinquished property is sold and the net proceeds from that sale are redeployed into a replacement property (deferring capital gains taxes in the process). However, a build-to-suit exchange allows you to make construction improvements to your new replacement property during the exchange period. This can be especially helpful for people who cannot seem to find the perfect property to fit their needs. With a build-to-suit exchange, you can exchange into a property and make improvements to it so that it better meets your desires. The biggest catch is that any improvements you intend to make need to be completed within the 180 day exchange period. So don’t get too excited about any huge construction projects as you’ve only got 180 days total to complete any and all improvements.

Get Help with Your Build-to-Suit Exchange

If you’re ready to realize the tax-saving benefits of a build-to-suit exchange, reach out to the professionals at CPEC1031 today. With more than twenty years of experience, our qualified intermediaries have the knowledge and the expertise to help you through the details of your 1031 exchange. Reach out to us today to see if you are a good candidate for a build-to-suit exchange. You can find us at our primary office located 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