How to Maximize your 1031 Exchange in a Hot Seller’s Market

Right now, it is a hot seller’s market and there is a lot of velocity in the 1031 exchange realm. Many property owners are looking to cash out at the top of the market, but they’d like to do that without having to pay all of their capital gains taxes. That’s where a 1031 exchange can help – by allowing you to defer your capital gains taxes on the sale of real estate.

Consider a Reverse or Build-to-Suit Exchange

Because the market is so tight and it’s difficult to find suitable replacement property, we’re seeing a lot of very sophisticated 1031 exchanges like reverse exchanges and build-to-suit exchanges. These types of exchanges can help you find the right replacement property before you sell your relinquished property and start your 1031 exchange countdown.

Don’t Wait Until the Last Minute

Due to the competitive nature of the commercial real estate market, it’s not a good idea to wait until the last minute with your 1031 exchange. It’s crucial to plan ahead and get your 1031 exchange set up well in advance of your closing.

Contact a CPEC1031, LLC Qualified Intermediary

If you are interested in learning more about the tax-saving benefits of a like-kind exchange, contact the qualified intermediaries at CPEC1031 today! Our team of 1031 exchange professionals can walk you through the exchange process from start to finish and ensure your exchange is a success. Reach out to us today at our Minneapolis offices and learn more about the full array of 1031 exchange services we provide and see how we can help with your next 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

Buying 1031 Exchange Replacement Property from a Related Person

There are a lot of rules and regulations that you need to keep straight in order to complete a successful 1031 exchange. One issue that taxpayers often worry about in the course of a 1031 exchange is buying property from a related person. In this article, we are going to talk about some things to keep in mind when you’re buying 1031 exchange replacement property form a related person.

Buying 1031 Exchange Property from a Related Party

When you buy your replacement property you’d probably prefer to buy from the devil you know rather than the devil you don’t know. However, the IRS has created rules that make it more difficult to buy 1031 exchange property from a related person. This is particularly true if you’re buying your replacement property from a related person.

Many farmers want to buy the property that’s adjacent to their home farm but the owner of the adjacent farm may be a family member. It often doesn’t make sense for a farmer to buy new property miles away, so they may have no choice but to purchase property form a related party.

1031 Exchange Team of Professionals

It’s important to surround yourself with the best and brightest professionals when embarking on a 1031 exchange. Make sure your accountant, lawyer, and qualified intermediary are in communication with each other so they can help guide you in the right direction throughout the course of your 1031 exchange. Contact CPEC1031, LLC today for help with your next 1031 exchange involving related parties. We have the skills and experience needed to guide you through the entire 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

The Importance of Working with an Experienced Qualified Intermediary on Your 1031 Exchange

When it comes to 1031 exchanges, experience matters a lot. In this article, we are going to explain why it’s important to work with an experienced qualified intermediary on your 1031 exchange.

The Dangers of Working with an Inexperienced Intermediary

In the realm of 1031 exchanges, there are a lot of rules and requirements, as well as plenty of traps for the uninitiated. Trying to complete your 1031 exchange by yourself or with an inexperienced intermediary is a recipe for disaster. It’s far too easy for an inexperienced intermediary to miss an important detail or deadline. If that happens, your entire 1031 exchange could be in jeopardy and you might have to abandon ship and recognize all your gain on the sale.

Working hand-in-hand with a 1031 exchange company that has been in the industry for years or even decades is the best way to ensure your 1031 exchange is successful and that you’re able to defer the maximum amount of capital gains taxes on your sale.

1031 Exchange Services in Minneapolis, MN

At CPEC1031, LLC our entire business is focused on assisting taxpayers through the 1031 exchange process. We have twenty years of experience facilitating like-kind exchanges of real estate. Our qualified intermediaries are ready and able to put that experience to work on your next 1031 exchange. Contact us today to learn more about the 1031 exchange process, whether your property qualifies, and how we can help you through all the details. You can find us at our main 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

How to Handle Post-1031 Exchange Refinances

A common trap for the unwary in a 1031 exchange is the post-exchange refinance. In this article, we are going to talk about how to handle post-1031 exchange refinances.

Things to Remember with Refinancing 1031 Exchange Property

In a real estate transaction, many bankers are exuberant and want to loan you as much money as you qualify to borrow. They will loan you as much money as they can. But remember, in a 1031 exchange you need to find a home for your equity. You’ve got radioactive proceeds from the sale of your relinquished property. What do you do with radioactive material? You don’t put it in your own pocket. You’ve got to put that radioactive cash into the replacement property.

If you bring in $300,000 as a down payment on the purchase of a new property, when the banker would ordinarily only require a down payment of $100,000 – the banker is going to be scratching their head wondering why you aren’t borrowing more money. They may be unaware of the requirements of a 1031 exchange.

The best course of action is to tailor your loan to the 1031 exchange in question so you don’t overborrow at the moment of acquisition. That way you will acquire a property of equal or greater value, equity, and debt. Then in a subsequent transaction, you can go back and refinance the replacement property after the dust has settled.

CPEC1031 is Here to Help!

Our qualified intermediaries are here to help you through your next 1031 exchange! CPEC1031 has over two decades of experience facilitating 1031 exchanges of all shapes and sizes. We can help you through the finer details of your next like-kind exchange of real estate.

• 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

How Much do You Need to Rent Out Your Family Cabin Before Doing a 1031 Exchange?

Let’s say you have a cabin up in northern Minnesota that, historically has been used for personal purposes (boating, BBQing, etc.) and now you want to do a 1031 exchange with it. In this article, we are going to discuss how long you need to rent out a family cabin before you can use it in a 1031 exchange transaction.

Vacation Property, Rental Pools & 1031 Exchanges

All property involved in a 1031 exchange needs to be used for investment or business purposes and not for personal use. So you can’t just immediately use your family cabin that you’ve been going to for years in a 1031 exchange. It is possible to use such a property in a 1031 exchange, but it takes a little leg work.

Essentially, you would need to stop using the property primarily for personal purposes, and instead start renting it out for a period of time before using it in a like-kind exchange. The IRS has a safe-harbor for rental pool properties in which they examine the two 12-month periods for the property in question to ensure it met the 1031 exchange requirements during that time. For two 12-month periods, you could put your property into a VRBO or AirBnB rental pool and rent it out for at least 14 days in each of those two 12-month periods. After that point, you could consider using the property in a 1031 exchange.

Like-Kind Real Estate Exchanges

If you’re looking to sell investment real estate, but are hesitant because of potential capital gains taxes, then a 1031 exchange may be a great fit for you! Section 1031 of the Internal Revenue Code allows any US taxpayer to defer their capital gains taxes on the sale of investment real property so long as they meet certain benchmarks. At CPEC1031, our qualified intermediaries have been helping taxpayers with their 1031 exchanges of real estate for over twenty years. Contact us today to learn more about how we can help with your next 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved