Real Estate

How to Profit from Real Estate while Deferring Taxes

Profit from Real Estate

Investing in real estate can be very profitable, but that’s not a guarantee. You need to understand the market, know when to sell / buy, and much more. One of the best tools in a real estate investors arsenal is the 1031 exchange. In this article, we are going to discuss how to profit from real estate while simultaneously deferring taxes with a 1031 exchange.

The Purpose of Section 1031

The purpose of section 1031 of the Internal Revenue Code is to incentivize real estate investors to continue investing their money in the market (thus leading to overall economic growth as a result). There is also a direct benefit to the taxpayer conducting the 1031 exchange in that they are able to defer their capital gains taxes on the real estate sale and keep their money building wealth in a continuing investment.

The next time you’re thinking about selling a piece of real property – consider a 1031 exchange first. As long as you meet all the benchmarks, you can defer your taxes and keep your profits working for you in a bigger, better property.

Save Money on Your Next Real Estate Transaction

If you are looking to save money on your next real estate transaction, consider a 1031 exchange to defer your capital gains taxes. With more than 20 years of experience under our belts, our qualified intermediaries have the resources to ensure that your exchange goes off without a hitch. We can prepare all of your 1031 documents and answer any questions you might have. Contact our intermediaries today at our downtown Minneapolis office to get your exchange up and running.

  •  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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

 

Tips for Reinvesting Real Estate Returns

Reinvesting Real Estate

Reinvesting your real estate returns is easy with section 1031 of the Internal Revenue Code. In this article, we are going to offer up some tips for reinvesting your real estate returns using a 1031 exchange.

Defer Taxes Indefinitely

The beauty of a 1031 exchange is that, when done properly, you can defer your capital gains taxes indefinitely by continually reinvesting the sales proceeds into new replacement property. This allows you to keep your money working for you in a continued investment, compounding wealth over time rather than cutting a check to the government.

Always Trade Up

One important thing to keep in mind when exchanging like-kind property is that you always want to trade up when it comes to your replacement property. That means your replacement property needs to be equal to or greater than your relinquished property in value, equity, and debt. In order to defer 100% of your gains, you need to be sure to satisfy these requirements.

Be Mindful of Your Timing

1031 exchanges are governed by strict time lines. Be sure you meet the necessary deadlines or your exchange will fail.

1031 Exchange Resources

If you need help with your 1031 exchange, let the professionals at Commercial Partners Exchange Company help. Our qualified intermediaries have two decades of experience assisting clients with their real estate exchanges under section 1031 of the Internal Revenue Code. We can help advise you throughout the process, prepare your documentation, and answer all of your questions. Contact us today at our downtown Minneapolis office to learn more about our services and get started with your very own 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

When to Involve a Real Estate Attorney in your 1031 Exchange

Real Estate Attorney

There are a lot of moving parts in a 1031 exchange and many players involved. Some taxpayers don’t know who to involve in their exchange. Should you involve your attorney? CPA? Financial planner? Someone else? In this article, we are going to discuss when it’s a good idea to involve a real estate attorney in the 1031 exchange process.

The Role of a Real Estate Attorney

There is a lot of complicated documentation that comes with any 1031 exchange. If you’re confused about any of it, your attorney can help clear things up. Your attorney can read through and help you understand purchase agreements, contracts, exchange documents, and closing documents that relate to your 1031 exchange.

Other Professionals

Your attorney is not the only professional you need on your 1031 exchange team. Far from it! Perhaps the most important person to have on your exchange team is a skilled qualified intermediary. This should be the point person throughout the exchange process. You should also consult with your CPA and financial planner to discuss the tax implications of the exchange and also how it will impact your portfolio.

Commercial Partners Exchange Company

At Commercial Partners Exchange Company, our intermediaries have twenty years of experience helping taxpayers defer capital gains taxes when selling real property. We can prepare your 1031 exchange documents, answer all of your questions, and advise you throughout your exchange. Get your 1031 exchange up and running today by calling our qualified intermediaries to start the process. With offices around the United States, we are fully equipped to facilitate your exchange, regardless of where your property is located.

  • 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchanging Contiguous Parcels of Real Estate

Commercial Property

Recently, a client came to us with the following 1031 exchange situation. There was a single tenant commercial building that the taxpayer was considering buying as the part of a 1031 exchange. On paper, the building consisted of about 8 condo units all owned by the same entity. But in person it was one physical building with one owner and one tenant. If the taxpayer were to trade in this property, would they be limited to trade into only 3 of the condo units or could it be all one “purchase.” 

1031 Identification Rules

Contiguous parcels of real property and condominium units are often regarded as “One” property for the purposes of the 1031 identification rules.

If the Replacement Property is one contiguous set of condo units that are all operated as one business unit and purchased from one seller at the same time, then it is one property for the purposes of using the three-property identification rule. Note, if you close on this Replacement Property within the first 45 days, then you do not have to designate or identify it in writing because you are deemed to have identified it by virtue of receiving it.

  • 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

Investing in Real Estate over Stocks

Real Estate Investing

If you’re looking to invest your money, two of the first places you will likely look are the stock market and the real estate market. Each option has its own unique benefits and drawbacks. In this article, we are going to explain a few reasons why investing in real estate instead of stocks can be beneficial and how a 1031 exchange can take your real estate investment to the next level.

Capital Gains Tax Burden

The biggest benefit to investing in real estate over stocks is that you may be able to avoid your capital gains tax liability when you sell.

Selling stocks typically results in capital gains taxes. Depending on the sale, this can add up to a sizeable tax burden for the seller.

Selling real estate in a typical transaction will also result in a capital gains tax bill, but these taxes can be deferred with a 1031 exchange. All you need to do is make sure that your sales proceeds are reinvested into like-kind real estate (and meet several other 1031 requirements) and you will be able to defer your capital gains taxes.

Qualified Intermediary Services

Working with a qualified intermediary is one of the best ways to ensure a successful 1031 exchange. Like-kind exchanges are complex transactions, and it’s good to have a professional who understands the process backwards and forwards. An intermediary can answer all of your questions, prepare all of your documents, and advise you on the specifics of your exchange. Reach out to us today to speak with our qualified intermediaries about your 1031 exchange. Our offices are located in downtown Minneapolis but we work with clients throughout Minnesota and across the country.

  • 1031 Hotline: If you have questions about investing in real estate with a 1031 exchange, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved