What Makes a Good Candidate for 1031 Exchange?

Many people who are considering a 1031 exchange want to know if it’s a good idea for their particular situation. In this article, we are going to discuss how to determine whether or not you are a good candidate for a 1031 exchange of real estate.

Like-Kind Exchanges

A like-kind exchange is a tax-deferral tool set forth in the Internal Revenue Code that allows taxpayers to defer their capital gains taxes when selling real estate as long as they hit certain benchmarks. When done correctly, a 1031 exchange allows you to avoid a big tax hit and keep that money working for you in a continued real estate investment – compounding your wealth over time.

Determining 1031 Exchange Eligibility

Here are some of the factors to consider to determine whether your property is eligible for 1031 exchange treatment:

• Qualifying Purpose. First and foremost, you need to hold your property for the right qualifying purpose. Specifically, your property needs to be held for use in your trade or business, or for investment purposes. Property held for personal use is not eligible for 1031 exchange.

• Like-Kind Property. Your replacement property also needs to be like-kind to your relinquished property to be considered for 1031 exchange.

• Equity, Value, Debt. To defer all of your gains, you also need to go up in value, equity, and debt on your replacement property.

1031 Exchanges of Real Estate

The qualified intermediaries at CPEC1031, LLC work with clients in many industries on their 1031 exchanges of real estate. We have twenty years of experience guiding patients through their 1031 exchange transactions. Our qualified intermediaries can prepare your 1031 documents, advise you on the details of your transaction, and answer any questions you might have. Reach out to us today at our downtown Minneapolis office to set up an appointment with one of our 1031 intermediaries and get started with your transaction.

• 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

How To Know When You Should Do A 1031 Exchange

When it comes to buying and selling real estate, timing is everything. Many taxpayers want to know whether it’s a good time for them to sell their property or do a 1031 exchange. In this article, we are going to talk about how to know if it’s a good time for you to do a 1031 exchange.

Consider the Tax Implications

When selling real estate, one of the biggest factors you need to be aware of are the tax implications. Selling a piece of real property will result in a potentially large capital gains tax bill. Are you prepared to shoulder the weight of such a tax bill? If not, an outright sale may not be your best option. Instead, a 1031 exchange can help you defer those taxes.

Think About Your Long-Term Plan

You also need to think long-term when it comes to real estate. If you currently own a management-intensive property and you’re getting on in years, you may want to consider exchanging out of that property and into something less management-intensive. That would allow you to earn a more passive investment income during your retirement years. A 1031 exchange can help you accomplish this.

1031 Exchange Service

At CPEC1031, LLC, we work with clients throughout the Twin Cities and beyond to provide excellent 1031 exchange services. Our team of qualified intermediaries has been facilitating exchanges of real estate for taxpayers in all industries for more than two decades. Let us help you through the ins and outs of your exchange. Our main offices are located in downtown Minneapolis, but we facilitate exchanges throughout the United States. Contact us today to learn more about the services we offer and get your exchange up and running today!

• 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 Reasons to Hire a Qualified Intermediary for your 1031 Exchange

We’ve talked before about the role of the qualified intermediary in a 1031 exchange. In this article, we are going to offer three reasons why it’s important to work with a qualified intermediary on your 1031 real estate exchange.

They Will Prepare Your 1031 Documents

There are a lot of documents that you need to prepare and execute during the 1031 exchange process. For the uninitiated, this can get complicated quickly. When you hire a qualified intermediary, they will prepare all of your 1031 exchange documents so you don’t have to. That way, you’ll have everything you need when you arrive at the closing table.

They Will Insulate Your From Receiving Boot

In a 1031 exchange, the person completing the exchange cannot receive any of the sales proceeds. Instead, these proceeds need to remain separate until they are rolled over into the new replacement property. Your intermediary can insulate you from receiving these proceeds (boot) by holding the funds until you are ready to close on the replacement property.

They Will Advise You Throughout the Process

A qualified intermediary is a professional who works on 1031 exchange transactions every day. Having this type of experience by your side throughout your exchange is extremely beneficial. Your intermediary will answer all of your questions and advise you throughout the 1031 exchange process.

Start a 1031 Exchange

CPEC1031, LLC works with investors large and small to defer capital gains taxes on the sale of real property. A 1031 exchange is a great tool to keep your money working for you and compounding in a continued investment property. Contact us today to speak with one of our qualified intermediaries about your exchange. We can work with you throughout the entire process, answering your questions, preparing the necessary documents, and make sure you have all your bases covered. Our main office is in downtown Minneapolis, but we work with clients on like-kind exchanges across 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

How Much Money do You Need to Re-Invest into Your 1031 Replacement Property?

In any 1031 exchange, the taxpayer conducting the exchange needs to re-invest their net proceeds from the sale of their relinquished property into their new replacement property. But how much money do you need to re-invest into the replacement property? This can cause a lot of confusion among taxpayers. In this article, we’ll discuss what exactly you need to re-invest into your replacement property during the course of a 1031 exchange.

Defer All of Your Taxes

If you want to defer 100% of your capital gains taxes in a 1031 exchange, you need to re-invest your proceeds into a property of equal or greater value than your relinquished property. By way of an example, if your relinquished property is sold for $600,000 (with $300,000 equity), you would need to re-invest in a replacement property that has a value of at least $600,000 (with $300,000 equity).

But what if you want to exchange into a replacement property that has a lower value than your relinquished property? In this instance, you would likely face some tax exposure during the exchange. You could also exchange into multiple properties to satisfy this requirement.

Learn How to Save Money on Capital Gains Taxes

CPEC1031, LLC is a full-service 1031 exchange company. We have twenty years of experience facilitating like-kind exchanges for clients under section 1031 of the Internal Revenue Code. Our intermediaries can prepare your 1031 exchange documents and walk you through each and every step of the process. Contact us today to learn more about our like-kind exchange services and how we can help you save money on your next real estate sale. Our main office is located in downtown Minneapolis, but we work with clients from all over 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

How to Make Your 1031 Exchange as Simple as Possible

1031 exchanges can be complex – especially to those who are unfamiliar with the process. But it doesn’t have to be that complicated! The purpose of this article is to make 1031 exchanges as simple as possible.

Like-Kind Property

1031 exchanges are also commonly called “like-kind” exchanges. That’s because all property in a 1031 exchange needs to be like-kind. Thankfully, like-kind is pretty broad when it comes to real estate.

No Personal Property Allowed

All property involved in a 1031 exchange transaction also needs to be held for business or investment use. Property that’s held primarily for personal use (your primary residence, for example) does not quality for 1031 treatment. Additionally, with the new Tax Cuts & Jobs Act that went into effect on January 1, 2018, personal property is no longer allowed. Only real estate is allowed to be exchanged in a 1031 transaction.

Talk with a Qualified Intermediary

When in doubt, it’s always a good idea to talk with a qualified intermediary about your 1031 situation. An intermediary can simplify the 1031 exchange process for you and make sure your exchange goes off without a hitch.

1031 Exchange Services in MN

The qualified intermediaries at CPEC1031, LLC have twenty years of experience facilitating exchanges of real property throughout the United States. We can help ensure that your exchange progresses without any issues. Give us a call today to set up a time to talk with one of our skilled qualified intermediaries about your 1031 exchange of real property. Our office is located in downtown Minneapolis, but we work with clients throughout Minnesota and all over 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved