1031 Exchange Considerations for Farmers

Farmers can benefit greatly from 1031 exchanges of land. However, there are many important things to keep in mind if you are a farmer considering an exchange. In this article, we are going to discuss a few important considerations for farmers looking to exchange their property in a 1031 transaction.

Personal Property Not Allowed

The biggest change in the 1031 exchange realm this year is that personal property is no longer eligible for 1031 exchange treatment. This is a result of the Tax Cuts & Jobs Act that went into effect in early 2018. Thankfully, this act preserved like-kind exchanges of real estate, but it effectively axed exchanges of personal property. That means any items of personal property you own and use for investment or business purposes cannot be exchanged in a 1031 transaction. Here are a few personal property items that cannot be exchanged:

• Livestock

• Agricultural Equipment

• Tractors

Help Through the 1031 Exchange Process

At CPEC1031, we employ the best and brightest qualified intermediaries. With more than two decades worth of experience, we have the skills and expertise to handle even the most complex of 1031 transactions. From preparing paperwork, to helping you identify replacement property, we can guide you through every stage of the 1031 exchange process. Give us a call today to learn more about our 1031 exchange services and to get the process started with your 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

Property that Cannot Be Exchanged Under Section 1031

The Tax Cuts & Jobs Act that was passed late last year and went into effect in early 2018 made numerous changes to the rules governing section 1031 – particularly what can and cannot be exchanged in a 1031 transaction. In this article, we are going to talk about a few types of property that cannot be exchanged under Section 1031 of the Internal Revenue Code.

Non Like-Kind Property

All property involved in a 1031 exchange needs to be like-kind. That means any non like-kind property is not eligible. How do you determine like-kind? Thankfully, the definition is pretty broad when it comes to real estate. But make sure you are only exchanging property that is used for investment or business purposes.

Personal Property

The Tax Cuts & Jobs Act which went into effect earlier this year effectively restricted 1031 exchanges to real property. That means that many items of personal property that were once eligible for 1031 treatment, can no longer be exchanged in such transactions. Here are a few examples of personal property items that can no longer be exchanged:

• Aircraft

• Artwork

• Business Equipment

• Coins & Precious Metals

• Livestock

Is a 1031 Exchange Right for You?

Looking for help with you 1031 exchange of real estate? Our qualified intermediaries are ready and able to walk you through every step of the process – from selling your relinquished property to closing on your new replacement property. At CPEC1031 our intermediaries have over two decades of experience facilitating exchanges in Minnesota and across the country. Contact us today at our downtown Minneapolis office to set up an appointment with one of our intermediaries and see if a 1031 exchange is right for you!

•  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 Exchange Situations to Avoid

The rules surrounding 1031 exchanges are strict and many taxpayers have found themselves in bad situations that could have been avoided with some planning. In this article, we are going to describe a few 1031 exchange situations that should be avoided at all costs.

Trading Down

In a 1031 exchange, your replacement property needs to equal to, or greater than your relinquished property in value, equity, and debt. If you fail to meet these benchmarks with your replacement property, you are essentially “trading down.” This can result in a financial benefit known as boot that is subject to taxation. To avoid this, make sure you are trading up with your replacement property.

Flipping Property

Buying a property, fixing it up, and selling it as soon as possible likely would not qualify for 1031 treatment. In this instance the property might be considered “stock in trade” and would not meet the requirements for a 1031 exchange.

“Dealing” Property

If you trade several properties throughout the course of a year, or exchange a property too quickly after you’ve acquired it, you may be labeled as a dealer, and your 1031 exchanges would not be considered valid.

Defer Your Real Estate Taxes

The qualified intermediaries at CPEC1031 have more than twenty years of experience working with clients throughout the state of Minnesota, and the rest of the country on their 1031 exchanges of real estate. We work hand-in-hand with our clients to make sure they understand the process every step of the way. Contact us today to learn more about the 1031 exchange process and how we can help you defer taxes on your next real estate deal.

• 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

Reverse 1031 Exchanges of Agricultural Property

Exchanging farmland and agricultural property in a 1031 transaction allows you to sell your property in the most tax-advantageous way possible. In this article, we are going to discuss some tips for doing a reverse exchange of agricultural property.

Benefits of a Reverse Exchange

So why do a reverse 1031 exchange of agricultural property rather than a forward exchange? Well, both are perfectly legitimate ways of deferring taxes when selling your property, but a reverse exchange may be better suited to your particular situation. In a reverse exchange of farmland, the taxpayer purchases their new replacement property first and then subsequently sells their relinquished property within the 180 day exchange period. This is the reverse order of operations compared to a forward exchange. The benefit of doing a reverse exchange is that you can lock up your replacement property as soon as possible. This can be especially helpful when the market is hot and you’re competing with other buyers trying to find the perfect property for your situation. If you find a piece of farmland that perfectly suits your needs and you’re afraid it’s going to be snatched up before you can sell your relinquished property, then a reverse exchange is the name of the game.

Reverse Exchange Company

If you are considering a reverse exchange of your property, contact a qualified intermediary about your situation today. At CPEC1031, our intermediaries have more than two decades of experience facilitating exchanges of real property for clients throughout the Twin Cities, greater Minnesota, and around the country. Contact us today at our downtown Minneapolis office to walk through the details of your exchange and start deferring your 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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

How to Defer Taxes When Selling Real Estate

When you sell a piece of real estate, you hope to make as much profit as possible. But with the capital gains taxes assessed on the sale, you may end up owing more than anticipated. A high capital gains tax bill may even be enough to dissuade you from selling your property. A 1031 exchange can solve many of these problems for you. In this article, we are going to talk about how a 1031 exchange can help you defer capital gains taxes when selling real estate.

Using a 1031 Exchange to Defer Taxes

A 1031 exchange is a great tool you have at your disposal to defer taxes on the sale of real estate. How, you ask? Instead of selling your property outright, taking the net proceeds, and paying the required capital gains taxes, you can reinvest your net proceeds into a like-kind replacement property. This is the 1031 exchange in a nutshell. No, you don’t get to pocket the sales proceeds, but you do get to defer a potentially huge capital gains tax hit. As an added bonus, you get to keep your money working for you in a continued investment property.

Capital Gains Tax Deferral

Capital gains taxes can really add up when selling real estate. Why not defer those taxes and keep your money working for you in a continued investment? That’s what a 1031 exchange allows you to do.  Reach out to the qualified intermediaries at CPEC1031 to learn more about the benefits of a 1031 exchange and to see if your property is a good fit. Our main office is located in downtown Minneapolis, but we work with clients throughout the state of Minnesota, and around the United States.

•  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