Empty Office Space Threatens a New Economic Crisis - 1031 Exchanges can Help

The COVID-19 pandemic is taking a toll on the commercial real estate industry, and its impact could have broader implications for the economy as a whole. In this article, we’ll take a look at the challenges facing the commercial real estate industry during the pandemic and some potential solutions.

The Impact of COVID-19

COVID-19 has impacted every industry in one way or another, and commercial real estate is no different. With various lock-down measures in effect across the country, more people are staying home – not going out to eat, drink, or shop nearly as much as before. Furthermore, many companies have instituted work from home policies for their employees for the foreseeable future. It’s not a stretch to imagine these companies rethinking their need for physical office space as we get deeper into this pandemic.

So what happens if companies choose not to renew their office leases and we end up with a significant number of empty buildings with no plan to replace their previous tenants? No one can say for sure what the outcome would be, but it likely wouldn’t be good.

1031 Exchanges can Help

Segments of real estate industry are much weaker and more vulnerable than people think. Removing 1031 exchanges (as Joe Biden has proposed in his tax plan) will further harm an industry that is essential for job creation, economic stability and growth. In a time of great uncertainty in the commercial real estate industry, it’s important that 1031 exchanges remain intact to help prevent the further downtown of the commercial real estate market and the economy as a whole.

1031 Exchange Company in Minneapolis, MN

CPEC1031, LLC has been facilitating 1031 exchanges of real estate for over twenty years. Our qualified intermediaries have the knowledge and experience to guide you through your real estate exchange. Contact us today to learn more about the 1031 exchange process and how we can help. 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

Can I Close All my Transactions (Purchase & Sale) on the Same Day in a 1031 Exchange?

Can you close all of your transactions on the same day in a 1031 exchange? That’s our topic of discussion for this article.

Closing Transactions on the Same Day

Yes, it is possible to close the relinquished property and multiple replacement properties all back-to-back on the same day…but it’s not recommended.

Generally, you space out the closings to allow time for the funds to transfer and to allow a little wiggle-room to account for unexpected delays.

What if the Buyer of the Relinquished Property Causes a Delay? 

In this scenario, all of the other closings for the replacement properties would get pushed back, causing frustration and extra work for the other parties.

Murphy's law states that "anything that can go wrong will go wrong," so allow sufficient time to get each leg done.

It is a hot seller’s market and title companies, escrow officers and real estate people are all working hard to keep up with the high volume, which means there is a good possibility of an unforeseen problem at some point.

CPEC1031

If you’re considering a 1031 exchange of your property, it’s important to get ahead of things early in the process to avoid any potential complications. Contact CPEC1031, LLC today to learn more about the exchange process and how we can help. Our qualified intermediaries have been facilitating 1031 exchanges for over two decades. We can help guide you through the exchange process.

• 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

The Many Benefits of 1031 Real Estate Exchanges

There are many reasons why you might benefit from doing a like-kind exchange, rather than selling your real property. In this article, we are going to discuss the benefits of doing a 1031 exchange of real estate.

Defer Your Capital Gains Tax

The largest immediate benefit to the taxpayer is that a 1031 exchange allows you to defer your capital gains on the sale of real estate. Typically, when you sell real estate, you are hit with a capital gains tax liability. A 1031 exchange encourages people to reinvest their proceeds by allowing them to defer those capital gains taxes as long as they move their net proceeds into a new replacement property.

Put Your Money to Work

A 1031 exchange also allows you to put your money to work, so to speak. Rather than writing a check to the government for those capital gains taxes, you can re-invest in a bigger, better property and keep that money compounding and building wealth over time.

Diversify Your Portfolio

Finally, a 1031 exchange is a great way of diversifying your real estate portfolio. With a like-kind real estate exchange, you can exchange out of and into different business segments as needed.

Qualified Intermediary Company in Minnesota

1031 exchanges can save you a lot of money in capital gains taxes when you sell real estate. At CPEC1031, LLC, we provide qualified intermediary services to clients in Minnesota and throughout the United States. Our qualified intermediaries have twenty years of experience facilitating like-kind exchanges, and have the skills necessary to ensure your exchange is successful. We can answer all of your questions, prepare your 1031 documents for closing, and advise you throughout the process. Contact us today to see if your property qualifies for a 1031 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

A 1031 Exchange Starter Guide for Beginners

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

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