Why You Need to Reinvest the Net Proceeds in a 1031 Exchange

Many people who are looking into doing a 1031 exchange don’t really know how much they need to buy and reinvest in order to defer all of their gains. This article will walk through the basics of performing a successful 1031 exchange.

Buy Up

If you think about it as needing to continue your investment into a like-kind property of equal or greater VALUE and EQUITY, you’ll see that you need to buy a replacement property of roughly equal or more than what you sold your relinquished property for. You are able to net off certain transactional expenses like a realtor commissions, closing costs, etc., but if you want a rough rule of thumb, look at buying a replacement property at a higher price. Many tax problems can be solved by buying a more expensive replacement property.

Cash Can Burn you with Taxes

The next element to look at is you don’t want to have any net proceeds go into your pocket. That cash would burn you with taxes. Remember to redeploy all of that cash (from the sale of your relinquished property) into your new replacement property.

Debt Relief

The last element to think about is debt relief. Any mortgages, liens, deeds of trust that you pay off on the sale of your old property need to be offset by either new debt or cash out of pocket. To summarize, buy a replacement property of greater value, reinvest all of your net proceeds, and offset any debt relief with new debt or additional cash. If you satisfy these rules of thumb, you’ll likely have an effective 1031 exchange.

Contact a Qualified Intermediary to Start Your 1031 Exchange

If you are interested in learning more about the tax-saving benefits of a real estate exchange, contact a qualified intermediary today! At CPEC1031, LLC our intermediaries have over two decades of experience facilitating 1031 exchanges both big and small. We can guide you through the process and make sure you have everything ready when it comes time to close. Contact us today at our downtown Minneapolis offices today to learn more about our services.

• 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

3 Reasons to Do a 1031 Exchange of Investment Real Estate

1031 exchanges of investment real estate offer many benefits to taxpayers looking to sell real property. In this article, we are going to discuss a few of those benefits and talk about three reasons to do a 1031 exchange of investment real estate.

Defer Your Capital Gains Taxes

First and foremost, a 1031 exchange allows you to defer your capital gains tax burden when selling investment real estate. In a standard real estate sale, you need to pay capital gains taxes on the sales proceeds. This can be a hefty tax burden. A 1031 exchange allows you to defer that tax burden and avoid a potentially huge tax bill. In order to defer your capital gains taxes in a 1031 exchange, you need to reinvest your net proceeds from the sale into a new replacement property.

Diversify your Portfolio

A 1031 exchange also offers a great method for diversifying your real estate investment portfolio. With a 1031 exchange, you can diversify into different asset classes, alternative market segments, and geographical areas.

Sell Your Vacation Home

A vacation home can be exchanged in a 1031 transaction. However, there are additional restrictions on 1031 exchanges of vacation homes that you should be aware of before starting the process.

Contact a 1031 Exchange Professional

If you are interested in learning more about the tax-saving benefits of a 1031 exchange, contact a qualified intermediary today. At CPEC1031, LLC we make the 1031 exchange process as painless as possible. Our team of professionals can guide you through the process, prepare your necessary documents, and answer any questions you have along the way. Reach out to us today to learn more about our services and how we can help with your next like-kind 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

The Benefits of 1031 Exchanges of Raw Land

1031 exchanges allow you to defer your capital gains tax burden on the sale of real estate. What many people don’t realize is that you can do 1031 exchanges of raw land, in addition to constructed properties. In this article, we are going to explain some of the benefits of 1031 exchanging raw land.

Raw Land Exchanges

1031 exchanges are governed by section 1031 of the Internal Revenue Code. They allow taxpayers to defer their capital gains taxes when selling real estate, as long as certain guidelines are met. All property involved in a 1031 exchange must be held for investment or business use – rather than personal use. It’s also important to note that you only have 180 days to complete your exchange once you start the process. If you satisfy all the requirements of a 1031 exchange you can defer your capital gains taxes on the sale. Over the long-run, your investment property will compound. If you wish to sell that replacement property at any point in the future, you can consider doing another 1031 exchange to keep the investment ball rolling!

You can also utilize raw land in a construction exchange (aka a build-to-suit exchange) in which you construct improvements to the property and include those in the exchange.

CPEC1031, LLC

CPEC1031, LLC is dedicated to helping taxpayers save money in capital gains taxes when selling investment real estate. Our 1031 exchange intermediaries have two decades of experience helping taxpayers with their 1031 exchanges. Let us put our experience to work for you on your next exchange of real property. We can walk you through the entire process and make sure you are informed and comfortable all along the way. 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

How to Know if You Have Enough Time to do a 1031 Exchange

Timing is an important issue in any 1031 exchange. There are essential deadlines you must hit in order to complete a successful 1031 exchange of real estate. In this article, we are going to explain how to know if you have enough time to do a 1031 exchange of real estate.

1031 Exchange Deadlines & Timeframes

In nearly every 1031 exchange of real estate, you have a total of 180 days from the start of your exchange to the finish. That means you have to sell your relinquished property and acquire your replacement property within 180 days. Additionally, the first 45 of those 180 days are set aside as your identification period during which you must identify in writing your replacement properties.

Don’t Wait Until the Last Minute

It’s a general best practice to not wait until the last minute to start a 1031 exchange. If you wait until the eleventh hour, it may be too late to get everything lined up for your exchange. Reach out to a qualified intermediary early on in the process.

Start a 1031 Exchange Today

If you’re ready to start your 1031 exchange of real estate, you’ve come to the right place! At CPEC1031, LLC our team of qualified intermediaries has been facilitating 1031 exchanges of all kinds for over two decades. We can help you through all the ins and outs of your 1031 exchange and make sure you have all the details covered. Contact us at our primary offices located in downtown Minneapolis to learn more about our services and how a 1031 exchange can help you save money in capital gains taxes.

• 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

Pro Tips for 1031 Exchanging Property in Different Industries

The 1031 exchange is a powerful and versatile tool that allows a taxpayer to exchange into and out of property in different sectors of the commercial real estate market. In this article, we are going to offer up some pro tips for 1031 exchanging property in different industries.

Like-Kind Real Property

All property involved in a 1031 exchange needs to be like-kind in order to qualify for tax-deferral. The good news is that like-kind is very broadly defined when it comes to real property. As long as your real property is held for investment or business purposes, it is most likely like-kind to any other real property held for a qualifying purpose. That means you can sell a relinquished property in one sector of the marketplace, and exchange into a replacement property in a totally different sector, as long as all the other requirements are met.

A 1031 Exchange Example

Let’s explain this further by examining a hypothetical example. Imagine you own a duplex that you want to sell in a 1031 exchange. You could sell that duplex and exchange into a replacement property in the same industry (perhaps into a triplex or four-plex), or you could exchange it for property in a completely different industry (a motel for example).

Contact a Qualified Intermediary

If you’re interested in learning more about the tax-saving benefits of a 1031 exchange, contact CPEC1031, LLC today. Our qualified intermediaries have over twenty years of experience facilitating 1031 exchanges of all stripes. Our team of professionals can guide you through the process and make sure your exchange is a success. Contact us today at our downtown Minneapolis offices to learn more about the process and see if you are a good candidate for a 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