Reverse Exchange

Competing for 1031 Replacement Property in a Hot Real Estate Market

Hot Real Estate Market

When the real estate market is hot, finding the right replacement property for your 1031 exchange is all the more difficult. Even when you do find a replacement property that you love, it may get snatched from beneath you before you can close the deal. In this article, we are going to offer some tips when competing for replacement property in a 1031 exchange.

The Reverse Exchange Option

If you are finding it hard to secure the replacement property you want; if all the properties you look at are getting snatched up by other buyers – then a reverse exchange is your best bet. With a reverse 1031 exchange, you can purchase your replacement property before you sell your relinquished property. This is essentially the opposite order of a typical 1031 exchange. Reverse exchanges are especially useful in hot real estate markets when properties are selling fast. A reverse exchange allows you to grab a replacement property without waiting until your relinquished property sale goes through. Then, within the following 180 days, you sell your relinquished property to complete the exchange.

Reverse Exchanges of Like-Kind Property

For more than twenty years, the 1031 exchange accommodators at Commercial Partners Exchange Company have been helping clients defer their taxes with section 1031 of the Internal Revenue Code. Let us help you prepare your documentation, and make sure you hit all of the necessary requirements. Reach out to the 1031 exchange professionals at Commercial Partners Exchange Company today to get your exchange off the ground. You can find us at our main office 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.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

 

How to Use a Reverse 1031 Exchange in a Hot Real Estate Market

Reverse Exchange

A competitive real estate market can be a blessing and a curse for investors. On the one hand, it’s great to be able to sell property quickly when needed. On the other hand, if you’re looking to reinvest your money into another property, it can be difficult to find the property you want before it gets snatched up by another buyer. This is where a reverse 1031 exchange can be a great help. In this article, we are going to explain how to use a reverse 1031 exchange to your advantage in a hot seller’s market.

Benefits of a Reverse Exchange

Using a reverse exchange, you can purchase your replacement property first, and subsequently sell your relinquished property. This allows you to snatch up the perfect replacement property if it comes up before you are able to sell your relinquished property.

Of course, the standard 1031 exchange time frames still apply to a reverse exchange. Namely, you have 180 days in total to complete your exchange – beginning with the purchase of your replacement property.

Twin Cities Reverse Exchange Company

At Commercial Partners Exchange Company, our qualified intermediaries have been assisting clients with reverse exchanges of real estate for more than two decades. We are fully equipped to guide you through every step in your 1031 exchange. Our intermediaries can prepare all of your exchange documents, answer all of your questions, and advise you on appropriate replacement properties. Contact us today at our downtown Minneapolis office to speak with one of our qualified intermediaries about your reverse 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

Does the New Tax Plan Allow Reverse 1031 Exchanges?

Reverse 1031 Exchange

1031 exchange investors have been asking a lot of questions about the new tax overhaul that went into effect earlier this month. We’re here to answer any questions you may have! One query that we’ve been hearing a lot is whether or not reverse exchanges are still allowed under the new law. In this article, we’re going to talk about whether or not reverse 1031 exchanges are allowed under the new tax law.

Reverse 1031 Exchanges of Real Estate

The new tax law preserves 1031 real estate exchanges. That means forward exchanges, reverse exchanges, build-to-suit exchanges of real estate are still viable. If you are looking to do a real estate exchange and you find a perfect replacement property before selling your relinquished property – a reverse exchange can help you defer your capital gains taxes.

Reverse Personal Property Exchanges

The same is not true of personal property exchanges. Under the new tax law, personal property exchanges are no longer valid. That means reverse exchanges involving personal property are not allowed moving forward.

1031 Reverse Exchange Company in St. Paul, MN

The team of 1031 professionals at Commercial Partners Exchange Company has been helping taxpayers and investors with their like kind exchanges for decades. We have the knowledge and experience needed to guide you through the 1031 exchange process, prepare the necessary documents for your exchange, and answer all of your questions along the way. If you are interested in learning more about the tax-saving benefits of the like-kind exchange, don’t hesitate to reach out to us at our downtown Minneapolis office.

  • 1031 Hotline: If you have questions about 1031 reverse exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

Steps to Take After a Reverse 1031 Exchange

Information in a 1031 Exchange

After a reverse exchange is completed and a replacement property that was parked by the intermediary has been conveyed to the taxpayer, the business may not be done. There may still be some administrative tidying up that needs to be done.

Change of Address

For example, the LLC that parked and held title to the replacement property may have been assigned to the taxpayer, but the records with the Secretary of State may still reflect the intermediary’s address as the business address of the LLC and as the registered agent. One administrative step after the reverse exchange is done is to file a new annual report with the Secretary of State reflecting the correct address and who is the new registered agent of the LLC.

If the address where the county tax statements are being sent to is showing as the intermediary’s address, the local county may continue to send the tax bills to the intermediary’s address rather than to the taxpayer. So another item to tidy up is to file or notify the local tax assessor where you want your tax statements and tax bills to be sent to in the future.

Notify the IRS

It may also be prudent to contact the IRS and notify them that the ownership of the LLC has substantially changed and request a new EIN number for the LLC.

These are little administrative items that are prudent to take immediately after the reverse exchange has been wrapped up. It's important not to delay too long because otherwise correspondence and important communication may be routed to the wrong address and the taxpayer may not receive that information for some time.

  • 1031 Hotline: If you have questions about administrative items after a reverse 1031 exchange, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved

The Importance of Notifying Your Qualified Intermediary in a Reverse Exchange

Parked Replacement Property

If you do a reverse exchange and you have the intermediary park the replacement property and hold it for your benefit, eventually (within 180 days) you need to sell or dispose of that old relinquished property so you can then acquire the parked replacement property.

Pro Tip

Here’s a pro tip - before you sell your relinquished property you need to notify the qualified intermediary so that they can prepare the appropriate 1031 documents, notices, and closing instructions related to the sale of your relinquished property. Just because you parked the replacement property doesn't mean that the intermediary’s job is done as it relates to the sale of your old relinquished property.

Assemble Your Team

Bring in your team, assemble them early, and give everybody notice of what's going on so you can get the best result on your 1031 reverse exchange.

  • 1031 Hotline: If you have questions about reverse 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved