Why a Son-in-Law is Not Automatically a “Related Party” for 1031 Exchange Purposes

When it comes to 1031 exchanges, you are barred from exchanging property with “related parties.” Most people assume that means you can’t exchange with anyone you are directly related to, but the rules are a bit more nuanced than that. For example, your 𝘀𝗼𝗻-𝗶𝗻-𝗹𝗮𝘄 is family but that does not automatically make him a “𝗿𝗲𝗹𝗮𝘁𝗲𝗱 𝗽𝗮𝗿𝘁𝘆” for Section 1031 purposes. We talk about why that is in this article.

Family Relationships

The tax code spells out what exactly constitutes a related party for 1031 purposes, and a son-in-law is not automatically defined as a related party. By family relationship alone, a son-in-law is not a brother, sister, spouse, ancestor, or lineal descendant. That being said, your son-in-law could still be related through a separate ownership or entity relationship.

Entity Relationships

Certain entity relationships can also create related-party status in a 1031 exchange. Under section 1031, a corporation and a partnership may be related if the same persons own more than 50% of the corporation and more than 50% of the partnership capital or profits interest.

1031 Exchange Services For Taxpayers Across the United States

At CPEC1031, LLC we provide 1031 exchange services to taxpayers across the United States, with our primary office located in Minneapolis, MN. With more than twenty years of experience in the 1031 exchange industry, our team of qualified intermediaries has the skills necessary to take your 1031 exchange across the finish line. We can advise you on the rules and requirements of section 1031, prepare your 1031 documentation, and make sure you are well-equipped to defer your capital gains tax burden. Contact us today to chat about 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

Reverse 1031 Exchange Benefits

There are several types of 1031 exchanges – forward exchanges, reverse exchanges, build-to-suit exchanges, etc. Each type has its own benefits. In this article, we discuss some of the numerous benefits of a reverse 1031 exchange of real estate.

Locking Down Replacement Property

A reverse 1031 exchange allows you to nail down a replacement property before you offload your relinquished property. In a hot seller’s market, this can be invaluable as it let’s you lock in a sure-thing so you’re not struggling to find replacement property after starting your 1031 exchange.

Capital Gains Tax Deferral

As with any type of 1031 exchange, a reverse exchange offers the benefit of capital gains tax deferral. This is the primary reason most taxpayers conduct 1031 exchanges and it’s easy to see why. Capital gains taxes can be a big downside of selling investment real estate. Deferring those taxes in a 1031 exchange is a much more attractive option for many investors.

Find a Qualified Intermediary for Your 1031 Transaction

If you’re looking for a qualified intermediary for your next 1031 transaction, look no further than CPEC1031, LLC. Our team consists of 1031 exchange intermediaries with decades of experience facilitating like-kind exchanges under section 1031 of the Internal Revenue Code. We have the skills needed to bring your exchange to a successful close. No matter what type of exchange you are conducting (forward, reverse, or build-to-suit) you can rest assured that our intermediaries have your best interests in mind. Contact us today at our Twin Cities office to set up a time to chat about 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchange Related Party Rules

“Related party” may sound like a straightforward concept, but in a 1031 exchange, it can be anything but.

It’s easy to think of related parties as simply members of the same family. But Section 1031 takes a broader view, and those relationships can affect how an exchange is structured and whether special rules apply.

Certain transactions between related parties are subject to additional requirements, including rules that can come into play if the exchanged properties are disposed of within two years.

That makes one step especially important:

Understand the ownership relationships before structuring the exchange.

Ask yourself:

• Who actually owns the property?

• What individuals or entities sit behind those ownership interests?

• What relationships exist among the parties involved?

• Identifying a potential related-party issue early can help avoid surprises later.

Before the 1031 exchange is designed, understand who is connected to whom and how those connections may impact the transaction.

Qualified Intermediary Services in Minnesota

For qualified intermediary services in Minnesota and beyond, look no further than CPEC1031, LLC! Our team is comprised of experienced 1031 accommodators who have been facilitating 1031 exchanges of all types for decades. Let us guide you through the process and work hand-in-hand to achieve capital gains tax deferral. You can reach us at our Twin Cities office, which is located in the heart of downtown Minneapolis. Please feel free to reach out to our team of 1031 exchange professionals today to learn more about the process and get started!

• 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

How 1031 Exchange Tax Deferral Can Be Part of a Larger Investment Strategy

A major benefit of a 1031 exchange is the potential to defer capital gains taxes when proceeds from the sale of qualifying investment real estate are reinvested into a replacement property according to IRS requirements.

A 1031 exchange can also be used as part of a larger investment strategy. For example, an investor could sell an existing commercial property and exchange into multifamily, industrial, office, or other qualifying investment (or business) real estate. The goal may be to reposition assets, diversify holdings, pursue different income opportunities, or acquire property that better aligns with changing investment objectives.

Because every transaction is different, it's important to evaluate the exchange structure, property qualifications, deadlines, and tax implications before proceeding. A qualified intermediary can help you set up your 1031 exchange strategy and work in tandem with your other advisors (your lawyer, CPA, real estate agent, etc.) to ensure the exchange is set up for success.

Take the Plunge with Section 1031

Take the plunge with section 1031 and start deferring your capital gains taxes on the sale of investment or business real estate. A 1031 exchange allows you to defer up to 100% of your capital gains tax burden so long as you reinvest your sales proceeds into a bigger replacement property. There are many rules and requirements when it comes to 1031 exchanges and it’s important to stay on top of things in order to ensure a successful exchange. The best way to do that is to work with a qualified intermediary throughout the process. Contact CPEC1031, LLC today to speak with our intermediaries and get started.

• 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

How to Include a 1031 Exchange in Your Long-Term Estate Strategy

A 1031 exchange can be part of a long-term estate strategy, not just a one-time tax deferral. This is a benefit that not many taxpayers are fully aware of. In this article, we discuss how you can include 1031 exchanges in your long-term estate strategy.

The Long-Term Benefits of a 1031 Exchange

There’s nothing in the tax code or treasury regulations that says you can only do one 1031 exchange. Throughout your lifetime, you can do many like-kind exchanges if you so choose. In fact, this is a common strategy for savvy investors who continue to defer their capital gains taxes by conducting subsequent exchanges and reinvesting their proceeds into newer replacement properties. This leads to long-term compounded wealth.

Upon your death, your heirs receive your 1031 exchange property with a step-up in basis. This can leave your heirs with, not only inherited property, but an enviable tax situation upon your passing. For these reasons, many people include 1031 exchanges as a part of their long-term estate planning strategy.

Find a Qualified Intermediary for Your 1031 Exchange

Working with a qualified intermediary is one of the best ways to set yourself up for a successful 1031 exchange. A skilled intermediary can help you through the 1031 exchange process and make sure you are aware of the various rules and regulations that govern 1031 transactions. At CPEC1031, LLC our intermediaries have decades of experience working on 1031 transactions of all types. We can help you with your like-kind exchange regardless of where your property is located. Reach out today to set up a time to speak with our qualified intermediaries.

• 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved