Videos

Video - Choosing a Bank to Hold your 1031 Exchange Funds

If clients are worried about the solvency of the bank that’s holding their funds in a 1031 exchange, you want to look to the size of the bank that’s holding the money. There are some banks in the US that are considered too big to fail (in other words, the government would never allow them to fail). So the first thing you want to ask yourself is “am I holding the exchange funds in a bank that’s too big to fail?” Then there are other programs that will disburse deposits through programs that have participant banks in them so that your monies are disbursed so that you always have FDIC coverage because your deposit is disbursed through a network of banks, each bank holding up to the FDIC coverage amount, which is $250,000 per account holder. The logical next question is “what about the solvency of the banks in that network?” Even if you’re covered up to the FDIC amount, what if the bank goes under and it takes you a year to get your money from the FDIC? Use a big bank to hold your funds – a bank that’s too big to fail. And get your money redeployed as quickly as possible. You don’t have to stay in the exchange for the full 180 day period and the sooner you get your money back to work for you, the quicker you’ll have peace of mind.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Video - How to Deal with Inherited Property in a 1031 Exchange

When you inherit property from a decedent, you may get a stepped up basis, which means rather than taking the carry-over basis from the decedent, your basis can be stepped up to the fair market value at the time you received that property from the decedent. Section 1014 gives you that stepped up basis. If you sell the property shortly after acquiring it from the decedent, you may not have much gain because your basis was stepped up. We don’t know what the state pegged the value at for estate tax purposes so you need to check with your accountant and perhaps the estate attorney that settled the account of the decedent to see what they pegged the value at for your step up in basis. If you sell it for more than what they pegged it, for estate tax purposes then you may have a gain. You may not have to do a 1031 exchange if you have little or no gain because of the step up in basis.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Video - 3 Ways to Identify your 1031 Exchange Replacement Property

In a 1031 exchange you have to identify or designate you replacement property within 45 days after the closing of your relinquished property, which isn’t very much time. Furthermore, it has to be identified in writing clearly and unambiguously describing the replacement properties and it has to be signed by the taxpayer and sent in before midnight of the 45th day. Generally, people use either the three property rule (which restricts the number of properties you can exchange into to three or fewer), or the 200% rule (which allows you to identify properties that in aggregate don’t exceed twice the value of the relinquished property), or the 95% rule (under which you can identify any number of properties buy you have to actually acquire at least 95% of those identified properties). Any of these rules will be valid for identifying your replacement property.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Video - Can You Use 1031 Exchange Funds for Earnest Money Deposits?

In a 1031 exchange, your qualified intermediary needs to hold your 1031 exchange proceeds in a separate account and make sure that you don’t have any actual or constructive receipt of the funds. But the intermediary can advance that money for either the purchase of the replacement property or a deposit (such as an earnest money deposit) for the purchase of the replacement property. So you can use your 1031 funds to advance an earnest money deposit. This is very convenient because it’s probably you preference to use the money in the exchange account to pay your deposits, rather than money out of your own pocket.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Video - 1031 Exchange Holding Period Rules

Many people ask – “is there an objective minimum timeframe that one has to hold a property in order to qualify for a 1031 exchange?” Strangely, the answer is no. The IRS seems to have hidden that piece of information by not articulating a bright line holding period in the code or in the regulations. What they say is that you have to have had an intention to use the property for a qualifying purpose of investment or business purposes. One of the important factors in determining if you had that requisite intent is how long you held it. So holding it for a long period of time can be a good fact.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Defer the tax. MAXIMIZE your gain.