What are the Benefits of 1031 Exchanges other than Tax Deferral?

When it comes to 1031 exchanges of real estate, most people are aware of the tax deferral benefits offered by section 1031. But there are a number of other potential benefits of doing a 1031 exchange that many people are unaware of. In this article, we are going to take a look at some of the benefits of 1031 exchange apart from tax deferral.

Greater Income Potential

Exchangors can sell any appreciated real property and acquire income-producing property with better cash flow and potential appreciation.

Change Property Types

With a 1031 exchange, taxpayers can exchange into different types of investment real estate. For example, taxpayers can exchange from residential to commercial property.

Relocate

Exchange your current property and relocate to a state with greater potential growth or lower tax rates.

Consolidate

Taxpayers who own multiple properties can consolidate by exchanging them into a single property.

Get out of Management Intensive Property

1031 exchanges allow you to exchange out of property that requires a lot of deferred maintenance and into new property that is less management intensive.

Lever Up

Lever up with a 1031 exchange by selling smaller property and stretching your equity out into larger property with greater potential appreciation.

CPEC1031

At CPEC1031, LLC, we are here to help you with your 1031 exchanges of real estate. We have been facilitating exchanges for taxpayers across the United States for over twenty years. Contact us today to discuss the details of your next 1031 exchange of real estate and start realizing the tax-saving benefits of section 1031. You can find us at our primary 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved.

1031 Exchange Considerations with Gifted Property

The big benefit of a 1031 exchange is that it allows you to defer taxes on your capital gains from the sale. Determining your capital gains is an important step in the 1031 exchange process. Unfortunately, with gifted property, determining your gain can be a difficult task. In this article, we are going to discuss 1031 exchanges of gifted property and the various things you need to be aware of with such transactions.

How to Determine Gain with Gifted Property

Let’s say your father gifts a property to you. In this situation, you can take his carry-over basis in the property that accrued over his lifetime. This is the case for property gifted after a person has died. If the gift is made during the person’s lifetime, the calculation may be a little different.

In general, you can determine gain by taking the net sales price of the property and subtracting your basis in the property.

Once you determine the gain, you have the option of deferring that gain with a 1031 exchange, so long as the property has been held for a qualified purpose (investment or business use) and meets the various other 1031 exchange benchmarks.

Real Estate Exchanges & Tax Deferral

At CPEC1031, LLC, our intermediaries have twenty years of experience helping clients defer their taxes on the sale of real property. Our intermediaries can help you prepare your documentation, identify your replacement property, and much more. Reach out to our 1031 exchange professionals today to get your exchange off the ground and start deferring taxes on your next real estate sale. While our primary office is located in downtown Minneapolis, we provide services to taxpayers throughout the state of Minnesota and around 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

3 Frequently Asked Questions About 1031 Exchanges

1031 exchanges are complex and many people have questions about how they work. In this article, we are going to answer three of the most frequently asked questions about 1031 exchanges.

Why Should I Consider a 1031 Exchange When I Could Just Sell My Property?

If you sell your property in a typical transaction, you will be required to pay capital gains taxes on the sale. Depending on the property involved, this can be a sizeable bill. A 1031 exchange allows you to defer those capital gains taxes and put that money into a continued real estate investment.

What is a Qualified Intermediary & Why Do I Need One?

A qualified intermediary is a professional who specializes in the facilitation of 1031 exchanges. Your qualified intermediary will be able to advise you throughout your exchange, prepare your 1031 exchange documents for closing, and also insulate you from receiving any of the net proceeds from your sale. Working with a qualified intermediary is perhaps the best way to ensure a successful exchange.

How Long Do I Have to Complete my Exchange?

There are two important deadlines to remember with any 1031 exchange. The first is 180 days. You have 180 days total to complete your exchange. The next important deadline is 45. The first 45 of those 180 days are set aside as your identification period. This is the period of time in which you need to identify your replacement property.

Real Estate Exchange Company

1031 real estate exchanges allow you to save money on taxes and keep your money compounding and building wealth in a continued investment. The qualified intermediaries at CPEC1031, LLC have twenty years of experience in the 1031 exchange industry. We work with clients through every stage of the 1031 process, prepare all the requisite documents, and answer any questions that arise along the way. Contact us today to set up a time to chat with one of our qualified intermediaries and learn more about how you can defer your capital gains taxes on the sale of your real property.

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

Can You Change Your Identified Property Late in the 1031 Exchange Process?

We get a lot of questions from clients about their 1031 exchanges. Recently, we had a client ask if they could make changes to their identified replacement property after their identification period had ended. That’s the topic we’ll be diving into in this article.

Identification Period

As we’ve discussed before, you have two important timelines to remember in a 1031 exchange. The first is the overall 180 day time period for your exchange. You must complete your exchange no later than 180 days after it begins. The second essential time period is the 45 day identification period. This is the first 45 days of your total 180 day exchange period. Within these 45 days you need to identify in writing the replacement property or properties that you intend to exchange into. That sounds pretty simple, but what if you want to make an amendment to your identification after day 45? Can you do that?

Unfortunately, no. The 45 day identification period is very strict. You are not allowed to make any changes to your replacement property identification after day 45 of your identification period. For that reason, it’s important to make sure you have all of your bases covered in advance of your deadlines.

Qualified Intermediaries in the Twin Cities

Consider a 1031 exchange if you want to defer capital gains taxes on the sale of your real estate. At CPEC1031, LLC, our intermediaries have two decades of experience working on 1031 exchanges with clients in Minnesota and around the country. We can help you with all the aspects of your 1031 exchange – advising you and preparing all the necessary documents along the way. Realize the tax-saving benefits of a 1031 exchange today by setting up a time to chat with one of our 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

What to do if your Property is Disqualified from 1031 Exchange Treatment

1031 exchanges are an effective method for deferring your taxes when selling real estate. However, not all property qualifies for 1031 exchange treatment. It’s important to understand what property qualifies before diving into an exchange. In this article, we are going to talk about the types of property that are disqualified from 1031 exchange treatment.

Property Held for the Wrong Use

The most fundamental rule that governs 1031 exchanges is the qualifying purpose rule, which states that all property involved in a 1031 exchange transaction needs to be held for a qualifying purpose. Essentially, any property used in a 1031 exchange has to be held for investment purposes or for use in your trade or business. That means property held for personal use (such as your family home) is disqualified.

Personal Property

Items of personal property are also excluded from 1031 exchange treatment. This is a relatively new change that came about with the passage of the Tax Cuts & Jobs Act, which excluded personal property exchanges. Taxpayers are no longer allowed to exchange aircraft, business equipment, artwork, gold coins, or other items of personal property. Only real estate is eligible for 1031 exchange treatment (at the time of this writing).

1031 Exchange Services in MN

At CPEC1031, we approach each and every 1031 exchange transaction with the unique attention that it needs. Our qualified intermediaries have over twenty years of experience facilitating exchanges of real estate in Minnesota and across the country. If you are exchanging property under section 1031, we can help you with every aspect of your exchange – from preparing documents to answering your questions, and more! Contact us today to learn more about the 1031 exchange services we provide and get your exchange off the ground.

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved