1031 Exchange can Help Reduce Capital Gains Tax on the Sale of Commercial Real Estate

A like-kind exchange can help you reduce your capital gains tax burden when you sell commercial real estate.  In this article, we are going to discuss how you can reduce your capital gains tax burden on the sale of commercial real estate.

Make Sure Your Property Qualifies

Before you begin the 1031 exchange process, you first need to determine whether or not your property qualifies for 1031 treatment. The basic benchmark is that your property needs to have been held for investment or business use. Real estate that you hold for personal use cannot be used in your 1031 exchange. Both your relinquished property and your replacement property also need to be like-kind (which essentially includes all real estate that’s held for investment purposes).

Work with a Qualified Intermediary

Hiring a qualified intermediary to help you with your 1031 exchange is one of the best things you can do to ensure a successful exchange. A qualified intermediary can advise you throughout your exchange, make sure you don’t succumb to any common 1031 traps, and prepare all of your exchange documentation for closing.

MN Like-Kind Exchange Intermediaries

1031 exchanges can be complex, and if you don’t know what you’re doing, you may end up with a failed exchange. Working with a qualified intermediary is your best bet for ensuring a successful exchange. An intermediary works with you through every step of the exchange – from document preparation, to finding the right replacement property, to closing. They take care of all the heavy lifting so you don’t have to. CPEC1031, LLC has been facilitating exchanges for over twenty years. Our qualified intermediaries have everything you need to set up and execute your like-kind exchange of real estate. Contact us today to talk about the details of your 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

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