1031 Exchange Rental Property Best Practices

With any 1031 exchange, there are various benchmarks you need to meet and rules you need to abide by in order to defer your capital gains taxes. In this article, we are going to talk about some best practices when dealing with 1031 exchange rental property.

Rental Property Best Practices

Some taxpayers purchase replacement properties that they may one day move into, but for the first few years after completing their exchanges, they are careful to actually rent the replacement properties out for a substantial period of time to satisfy the requirements for their 1031 exchange. How long should they rent out their properties? The longer the better. 

It’s interesting that the rules for excluding your gain on the sale of your personal residence under IRC Section 121 have special requirements and allowances for properties that you previously 1031 like-kind exchanged into. It’s also interesting that the IRS has created safe harbors for replacement properties that are put into rental pools, and still allow the taxpayer to use the property on a limited basis for personal use.

Defer Taxes with a 1031 Exchange

A 1031 exchange can help you defer your capital gains taxes on the sale of investment real estate. The qualified intermediaries at CPEC1031, LLC can help guide you through the entire 1031 exchange process and answer all of your questions. We have over two decades of experience working on 1031 exchanges of all types. Contact us today at our Minneapolis office to learn more about the like-kind exchange process and see if your property qualifies.

• 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

When to Park Your 1031 Exchange Property

We’re currently experiencing a hot seller’s real estate market, which can make it difficult for taxpayers looking to find replacement property for their 1031 exchanges. In this article, we are going to discuss when it’s advantageous to park your 1031 exchange property.

Parking Your 1031 Exchange Property

If you are having trouble locking up a replacement property for your 1031 exchange, what you need to do is a reverse 1031 exchange. In a typical reverse exchange, CPEC1031 acting as your intermediary sets up an Exchange Accommodation Titleholder (“EAT”). This is typically an LLC wholly owned by the intermediary that acquires the new property for you. The EAT purchases the replacement property and holds it so nobody else can get it. The IRS has laid out a safe-harbor in revenue procedure 2000-37. This is basically a recipe on how to do a reverse exchange. The best part of this deal (procedure) is that you can have your intermediary take down this property through the EAT. The bad side is, your intermediary can only park (own) this property and hold it in the EAT for up to 180 days under the safe-harbor. That means, you basically have six months to unload or dump your old relinquished property.

CPEC1031, LLC – 1031 Exchange Company

At CPEC1031, LLC we focus exclusively on 1031 exchanges under section 1031 of the Internal Revenue Code. We have over twenty years of experience facilitating like-kind exchanges of investment real estate. Let us put our experience to work for you on your next 1031 exchange. Start realizing the tax saving benefits offered by the 1031 exchange. Contact us today to learn more about our 1031 exchange services. You can find us at our primary offices 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

Why a 1031 Exchange Might be Right for You

When you’re looking to sell a piece of property, you have several options. You could sell the property in a traditional sale and pay any necessary taxes. Or you could defer those taxes by utilizing a 1031 exchange. In this article, we are going to explain why a 1031 exchange of investment real estate might be the right option for your property.

Why is a 1031 Tax Exchange Good For You?

The key benefit is that your capital gains tax liability that would otherwise become due is deferred under Section 1031 of the code. The main value to investors is that as long as your money continues to be re-invested (over and over again) in other qualifying like-kind property, your portfolio can continue to grow in value (without taxation). You can use the money that would otherwise go to the government in taxes to buy more replacement property, allowing you to buy more and bigger properties.  Over time this tax-free compounding has a tremendous wealth building power

Get Your 1031 Exchange Started

Get your 1031 exchange started today by contacting the qualified intermediaries at CPEC1031, LLC. Our team of intermediaries has been facilitating 1031 exchanges for more than twenty years. We have the experience needed to ensure your 1031 exchange is a success. Reach out to us today to discuss your 1031 exchange of investment real estate. We can answer your questions and prepare all of your documentation prior to closing. Contact us today at our Minneapolis offices to learn more about the process and how we can help!

• 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

Hot Commercial Real Estate Trends in 2022

Many people are interested in getting into the business of real estate investing because they see it as a sane place to invest their money. They don’t want to be subject to the whims of the stock market going up and down. Instead, they want a more stable investment opportunity. In this article, we are going to discuss a couple of hot investment trends we’re seeing in the commercial real estate industry.

The Housing Hack

What we see in this marketplace right now is a huge amount of interest in what we call the “housing hack.” Young entrepreneurial Millennials are figuring out that they need to start preparing for their future by building their wealth in real estate. To that end, many young investors are looking for duplexes, tri-plexes, or four-plexes that they can owner/occupy a portion of and rent out the rest. They’re getting into the business of real estate like so many past generations.

VRBO & AirBnB

Another trend we are seeing lately are people looking for VRBO / AirBnb type investments. Investors are looking for opportunities to purchase investment or business real estate in desirable vacation areas of the state of Minnesota.

CPEC1031, LLC

If you’re looking to defer capital gains taxes on the sale of investment real estate, a 1031 exchange may be right for you. At CPEC1031, LLC we have more than twenty years of experience facilitating like-kind exchanges of all shapes and sizes. We can help you through all the details of your exchange. Contact us at our 1031 exchange offices in downtown Minneapolis today to learn more about our services and 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

Safe Harbor vs. Non Safe Harbor Reverse Construction Exchanges

In a reverse construction exchange, can you use your 1031 exchange proceeds to buy raw land and then construct improvements on that land? That’s a great question that we’ll be tackling in this article.

In a 1031 exchange, a general rule of thumb is you can’t exchange into property you already own because it wouldn’t be an exchange. So the best course of action is to have the qualified intermediary buy the new land and hold title to it while the improvements are constructed. This allows the taxpayer to exchange into, not only the raw land, but also the improvements that are constructed on the land.

Safe Harbor Exchange

Now, there are a couple of ways to go about this. The first is a safe-harbor 1031 exchange. This is the safest and easiest method, but any improvements you want to construct on the land must be completed within 180 days. There are only so many improvements you can construct during that amount of time.

Non Safe Harbor 1031 Exchange

The more complex and sophisticated method would be to do a non-safe harbor reverse exchange. With this option, you would purchase your replacement property (the raw land) and construct improvements on it first. Then, when construction is complete, you can sell your relinquished property after the fact – hence the “reverse” 1031 exchange.

Start Your 1031 Exchange Today!

Start your 1031 exchange today with CPEC1031, LLC and start realizing the tax-saving benefits of a like-kind exchange. At CPEC1031, we have over twenty years of experience working on 1031 exchanges of real estate. Let us put that experience to work for you on your next like-kind exchange. We can walk you through the entire process and make sure you are fully prepared when it comes time to close you’re your property. Contact us at our Minneapolis offices today to see how we can help you 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