1031 Exchange Advantages vs. Disadvantages

Advantages of a 1031 Exchange

The taxpayer may dispose of property without bringing upon oneself any immediate tax liability. This allows the taxpayer to keep the earning power of the deferred tax dollars working for them in another investment. In effect, this money can be considered an interest-free loan from the IRS. There is no interest paid on the outstanding loan balance and there is no specific due date.

The loan will be abolished upon the death of the taxpayer, which means that the taxpayer's estate never has to repay the loan. The taxpayer who is entitled by law gets a stepped-up basis on the inherited property; that is, their basis is the fair market value of the inherited property at the time of the taxpayer's death. A subsequent sale by the heirs will be taxable only to the extent of the difference between the stepped-up basis and the net sale price.

1031 exchange is highly advantageous to the taxpayer as it enables the taxpayers to sell income, investment or business property and replace with like-kind replacement property without having to pay the capital gain taxes on the transaction. Section 1031 of IRS is the basis of tax-deferred exchanges.

Disadvantages of a 1031 Exchange

The main disadvantage of 1031 exchange is that it offers a reduced basis for depreciation in the replacement property. The tax on the replacement property is calculated on the basis of the purchase price of the replacement property minus the gain, which was deferred on the sale of the relinquished property as a result of the exchange. Thus the taxpayer needs to pay tax also on the deferred gain if he cashes out of his investment.

Minneapolis 1031 Exchange Intermediaries

At CPEC1031, we work with investment real estate owners of all shapes and sizes on their 1031 exchanges. Ultimately, a 1031 exchange allows you to defer capital gains taxes when selling real estate. We make that process as easy as possible for all our clients. Contact us today to learn more about the like-kind exchange process or to get your exchange started. You can find us at our primary office in downtown Minneapolis, or at one of our satellite offices located across 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchange Tips for Landlords

1031 exchanges can be beneficial to investment property owners for a variety of reasons. In this article, we are going to talk specifically about how 1031 exchanges can benefit landlords.

Exchange Into a Less Management Intensive Property

Being a landlord is a lot of work - from dealing with repairs, to finding and managing renters, and more.

If you’re getting on in years or you’re simply not interested in shouldering the responsibilities of being a landlord any longer, a 1031 exchange may be your golden ticket. Because you can exchange into and out of different real estate markets, a like-kind exchange allows you to exchange out of your current rental property and into a less management intensive replacement property.

Defer Your Capital Gains Taxes

Of course, the biggest incentive to conduct a 1031 exchange is to defer your capital gains taxes when selling your property. Selling a rental property in a straight forward sale can result in a heft capital gains tax burden. Why not defer those capital gains taxes and move your money into a continuing investment replacement property?

1031 Exchange Services in Minneapolis, MN

At CPEC1031, we facilitate 1031 exchanges of real estate for investors big and small. If you’re thinking of selling a piece of investment real estate but you don’t want to pay the required capital gains taxes, then a 1031 exchange may be a great option for you! Our 1031 intermediaries can walk you through the entire process and ensure that you feel comfortable and informed the entire way. Contact us today to learn more and to see if your property qualifies for 1031 exchange treatment.

• 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

3 Dates to Remember in a 1031 Exchange

Deadlines are extremely important in a 1031 exchange. In this article, we are going to talk about the three most important dates to remember in a 1031 exchange of real estate.

The Date of Your Relinquished Property Sale

The first date you need to keep in mind is the date on which you sell your relinquished property. Your 1031 exchange clock starts ticking the day you sell your relinquished property so it’s important to know when this is going to happen in order to properly prepare for the rest of your 1031 exchange period.

The Date of Your Replacement Property Identification Deadline

Next, you need to mark your calendar with the date of your replacement property identification deadline. Once your exchange begins, you have 45 days to identify in writing all of the replacement properties you intend to exchange into.

The Final Date of Your 1031 Exchange Period

And finally, you need to know the final date of your 1031 exchange period. You have 180 days in total to complete your 1031 exchange once you sell your relinquished property. There are a few rare situations in which your exchange period may be different – so you should always consult with a qualified intermediary on the specifics of your exchange.

CPEC1031

At CPEC1031, our specialty is 1031 exchanges. In fact, we focus solely on providing the best possible 1031 exchange services in the industry. Our qualified intermediaries have over two decades of experience working with clients throughout the state of Minnesota and beyond on their like-kind exchanges. We can help you save capital gains taxes on your next real estate sale. Contact us today at our downtown Minneapolis office to learn more!

• 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

Build-to-Suit Exchanges – What are the True Benefits?

Build-to-suit exchanges are a great alternative for people who want to conduct a 1031 exchange, but can’t find the perfect property. In this article, we are going to discuss the true benefits of build-to-suit exchanges.

How a Build-to-Suit Exchange Works

A build-to-suit exchange is similar to a typical forward 1031 exchange in that a relinquished property is sold and the net proceeds from that sale are redeployed into a replacement property (deferring capital gains taxes in the process). However, a build-to-suit exchange allows you to make construction improvements to your new replacement property during the exchange period. This can be especially helpful for people who cannot seem to find the perfect property to fit their needs. With a build-to-suit exchange, you can exchange into a property and make improvements to it so that it better meets your desires. The biggest catch is that any improvements you intend to make need to be completed within the 180 day exchange period. So don’t get too excited about any huge construction projects as you’ve only got 180 days total to complete any and all improvements.

Get Help with Your Build-to-Suit Exchange

If you’re ready to realize the tax-saving benefits of a build-to-suit exchange, reach out to the professionals at CPEC1031 today. With more than twenty years of experience, our qualified intermediaries have the knowledge and the expertise to help you through the details of your 1031 exchange. Reach out to us today to see if you are a good candidate for a build-to-suit exchange. You can find us at our primary office located 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

A Few Words From Our 1031 Exchange Clients

At CPEC1031, we are all about providing the best possible service to our clients. In this article, we are going to let our clients speak for themselves about the services we provide at CPEC1031.

Lyna Vanderlinde

When I recommend Jeff Peterson and his staff to a client for a 1031 exchange, I do so with the uppermost confidence and trust that that file will be handled in the most professional manner. I have worked with numerous exchange companies and hands down the best experience has been with Jeff and his team here at CPEC.

Paul Chamberlain

We have worked for many years exclusively with Jeff Peterson at CPEC1031 whenever we handle a 1031 like-kind exchange. Jeff always gives competent and prompt service. He knows the details needed to qualify for 1031 transactions, and he is a seamless partner to complete the deals with confidence. He also follows up regularly to make sure the 45-day and 180-day time requirements are completed. All clients have expressed their satisfaction with Jeff's expert service. I heartily recommend him without reservation.

Eric Eickhof

The concept of a 1031 exchange is simple, but the actual process is far from a straightforward process, and the consequences of a mistake are too large to risk. This is why you need Jeff Peterson looking out for you. As a real estate broker, I have referred several clients to Jeff and his team, but recently I had the experience of working first hand in a personal deal. He is unique because he takes the extra time to make sure he fully understands the situation and then ensures you have all options laid out in a clear path. Jeff is so much more than a financial intermediary/consultant/title company, he is an educator who teaches from experience and empowers his team and clients accomplish lofty 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