3 Signs that Your Property Does Not Qualify for 1031 Exchange Treatment

Before you even think about starting a 1031 exchange, you have to first determine whether or not your property even qualifies. The basic rule of thumb is that all 1031 exchange property must be held for investment or business purposes. Additionally, only real property may qualify for 1031 exchange – personal property need not apply. In this article, we are going to talk about a few signs that indicate that your property does not qualify for 1031 exchange treatment.

You Live in Your Property

If you are living in your property as a primary residence, it will likely not meet the qualified use requirement for 1031 treatment. The IRS limits 1031 exchanges to investment property only so your family home that you currently live in will not qualify.

Your Property is not Real Estate

As mentioned above, 1031 exchanges currently only apply to real estate. If you’re trying to exchange items of personal property, you will not be able to do so in a 1031 transaction. This is a fairly recent change brought on by the Tax Cuts and Jobs Act.

Your Property is Used as a Vacation Rental

Vacation rental properties may qualify for 1031 treatment, but they have to meet pretty strict barriers. Learn more about vacation property 1031 exchanges here.

Sell Your Investment Property in a 1031 Exchange

1031 exchanges offer great benefits to big and small investors alike. When structured correctly, a 1031 exchange offers you the ability to defer your capital gains taxes on the sale of real estate, so long as you reinvest your net proceeds into a bigger replacement property. There are a lot of requirements you have to meet in order to complete a successful exchange and working with a qualified intermediary is the best way to cover your bases. Contact us today to learn more about our 1031 exchange services and how we can help you achieve your investment goals.

• 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchange Warnings Signs to Look Out For

There are a lot of potential elements that can derail a 1031 exchange if you’re not careful. In this article, we are going to discuss some potential warning signs that could lead to a failed 1031 exchange.

Your Replacement Property Isn’t Big Enough

In order to defer 100% of your gains (which is the ultimate goal of any 1031 exchange) you have to exchange into a replacement property that is equal to or greater than your relinquished property in value, equity, and debt. Make sure you’re exchanging up and not down with your replacement property.

You Miss a Deadline

There are two extremely important deadlines you need to be aware of in a 1031 exchange. You’ve only got 180 days in total from the sale of your relinquished property to the purchase of your replacement property. Within that 180 day time period, there is another time period – your identification period – which runs for the first 45 of those 180 days. It’s important to keep these deadlines in mind at all times because they are quite firm.

CPEC1031

CPEC1031, LLC has been facilitating 1031 exchanges for over two decades. We are well-respected in the industry and have the resources needed to ensure your 1031 exchange is a resounding success. Our qualified intermediaries can help prepare all of your required documents in advance of the closing table. Contact us today at our primary offices in downtown Minneapolis to schedule a time to chat with our team of qualified intermediaries about the details of your like-kind 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

The 1031 Exchange Guide to Real Estate

One of the best aspects of section 1031 is that it applies to nearly all investment real estate. As long as your property is held for the appropriate purposes (investment or business), you can exchange an apartment complex for a hotel, farmland for a retail building, or any other combination. In this article, we are going to look at a few types of real estate that are commonly exchanged under section 1031 of the Internal Revenue Code.

Apartment Buildings & Hotels

Apartment buildings are some of the most commonly exchanged properties under section 1031. If you own a duplex building and want to exchange up to a fourplex – you’re a great candidate for 1031 exchange.

Farmland

Many farmers are not aware that they can avail themselves of a 1031 exchange when selling their land. This can allow them to defer a big capital gains tax bill and reinvest their assets into a less management intensive property in their retirement years.

Retail

Retail buildings, storefronts, strip malls, and more can all qualify for 1031 exchange treatment as well.

Learn More About Section 1031

If you’d like to learn more about section 1031 of the Internal Revenue Code and how it can help you save money on capital gains taxes, contact CPEC1031 today. Our qualified intermediaries have over two decades of experience facilitating exchanges of real property across the United States. We can help guide you through the entire 1031 exchange process and make sure you feel comfortable every step of the way! Contact us at our downtown Minneapolis office to set up a time to meet.

• 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

Tips for Finding & Identifying the Perfect Replacement Property

One of the most challenging aspects of a like-kind exchange is finding the right replacement property. In this article, we will offer up some tips for finding and identifying the perfect replacement property for your 1031 exchange.

Keep a Wide View of Your Options

Don’t focus too narrowly on a specific property you want to exchange into. In a hot seller’s market, you may not be able to get the exact property you want before someone else snatches it up. The good news is that you can exchange pretty much any real estate for other real estate (provided it’s held for investment or business purposes). It doesn’t hurt to expand your scope and consider options you may not have thought of before.

Give Yourself Enough Time

1031 exchanges have to abide by strict timelines. To review: once you sell your relinquished property, you only have 180 days to acquire your replacement property and finish your exchange. The first 45 segment of those 180 days are set aside as your identification period. Start looking for replacement property before you even sell your relinquished property so you don’t back yourself into a corner that you can’t get out of.

Contact a Like-Kind Qualified Intermediary

CPEC1031 specializes in real estate exchanges under section 1031 of the Internal Revenue Code. Twenty years of experience has given us unique insight into the ins and outs of the 1031 exchange process. Reach out to a qualified intermediary at CPEC1031 today to discuss the details of your 1031 exchange. You can find us at our offices 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

Section 1031 is a Very Powerful Provision!

It says, "no gain... is recognized" on the transfer of QUALIFIED 1031 PROPERTY, which is property that has been held for "use in a trade or business" or for "investment purposes" that is exchanged for new like-kind business or investment property.

This means you can structure your sale to be tax-free - by indefinitely deferring your capital gains tax!

Like-Kind Property

Notice that the regulation says that the exchange has to be of "Like-Kind" property. Properties are considered to be like-kind, if they are of the same nature or character, even if they differ in grade or quality. This is very broadly applied to nearly all real property in the United States.

For example, you can exchange a farm for an apartment building - and yes, they are both considered like-kind because they are both REAL ESTATE. Likewise, industrial or commercial real-property can be exchanged for residential real-property. Note that real property in the United States and real property outside the United States are not considered like-kind.

Vacation homes, second homes and property that is used primarily for personal-use, is also EXCLUDED from Section 1031.

As you can see - a 1031 exchange is extremely useful for the right type of property - but can be somewhat complicated - so be sure utilize a qualified intermediary to ensure the success of your tax-free transfer.

Contact a Qualified Intermediary About Your 1031 Exchange

Are you looking to exchange your investment real estate in a like-kind transaction in order to save money in capital gains taxes? If so, you’ve come to the right place. At CPEC1031 has over twenty years of experience facilitating exchanges of all kinds under section 1031 of the Internal Revenue Code. We have the resources and expertise to help you through the process. Contact us today to learn more about the 1031 exchange process and how we can help!

• 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved