How to Report a 1031 Exchange of Real Estate on Your Taxes

With tax season approaching, many taxpayers have questions about what they need to report and how they should go about doing so. This is especially true for taxpayers who have conducted a 1031 exchange in 2018. In this article, we will discuss how to appropriately report your 1031 exchange when you file your taxes for 2018.

Use Form 8824

First, to state the obvious. Yes, you do need to report your 1031 exchange to the IRS. You do so via form 8824, which tells the IRS where the net proceeds from your 1031 exchange went. When you sell a property, your title company or closing agent is required to report that to the IRS via form 1099. Filing form 8824 explains to the IRS that this sale was a 1031 exchange transaction.

Click on the link below to get a copy of form 8824:

• Form 8824

Consult with Your CPA

You should consult with your CPA on all of this. If you haven’t already, inform them of your 1031 exchange and they will be able to help you report it in your tax filing. In fact, it’s a good idea to involve your CPA in the 1031 exchange process early on. They know your tax situation better than anyone and can advise you on how an exchange will impact your tax situation.

Get the Help You Need with Your 1031 Exchange

If you need help with the tax reporting requirements of your 1031 exchange – or anything else related to your like-kind exchange – contact CPEC1031, LLC today. Our qualified intermediaries have more than two decades of experience facilitating exchanges in all industries. We have the knowledge and expertise needed to walk you through your exchange. Contact us today at our office in downtown Minneapolis to set up a time to chat with one of our qualified intermediaries about 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.

© 2021 Copyright Jeffrey R. Peterson All Rights Reserved

Why You Should Consider a 1031 Exchange in 2021

1031 exchanges of real estate are alive and well. If you’ve been thinking about doing a 1031 exchange of your real property, 2021 may be the year for you. In this article, we are going to talk about why you should consider doing a 1031 exchange in 2021.

Defer Your Taxes!

The greatest benefit of a 1031 exchange is that you are able to defer your capital gains taxes on the sale of your property. There are, of course, a few caveats that come with this. You need to reinvest your net proceeds into a property that is greater than your relinquished property in value, equity, and debt; you need to complete the transaction within 180 days; all property needs to be like-kind and needs to be used for a qualifying purpose.

Keep Your Money Working For You!

In a 1031 exchange, you reinvest your sales proceeds from your relinquished property into a bigger replacement property. In essence, you’re taking money that would have otherwise gone to the government in capital gains taxes and instead keeping that money working for a you in a continued investment. This has the dual benefit of spurring economic growth and incentivizing taxpayers to keep reinvesting in the market.

Minnesota 1031 Exchange Company

The qualified intermediaries at CPEC1031, LLC have more than two decades of experience facilitating exchanges. Our intermediaries can help you through each and every stage of your 1031 exchange – from the sale of your relinquished property to the closing of your new replacement property. Contact us today to set up a time to speak with one of our qualified intermediaries about your 1031 exchange. Our primary office is located in downtown Minneapolis, but we work with clients throughout the state of Minnesota, and across the country.

• 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.

© 2021 Copyright Jeffrey R. Peterson All Rights Reserved

How to Save a Failing 1031 Exchange

When a 1031 exchange fails, it may seem like the end of the world. But don’t give up! There are options for salvaging a 1031 exchange. A popular option for rescuing a failed 1031 exchange is the Deferred Sales Trust. In this article, we are going to talk about how a Deferred Sales Trust (or DST for short) can help you rescue a failed 1031 exchange of real estate.

Avoiding a Failed 1031 Exchange

The first thing you want to do is take all the necessary precautions to avoid a failed 1031 exchange in the first place. The best way to do that is to begin preparations for your 1031 exchange well in advance and to involve a qualified intermediary early in the process.

Most 1031 exchanges fail because the taxpayer receives taxable boot during the process, fails to complete the exchange within the 180 day deadline, or does not accurately identify their replacement property. An intermediary can help you avoid all of these costly errors.

The Deferred Sales Trust Alternative

Even if your exchange fails, you are not completely out of luck. Converting your failed 1031 exchange into a Deferred Sales Trust is a great alternative method for deferring your taxes on the sale of real estate.

Hire a Qualified Intermediary

Hiring a qualified intermediary is an essential first step in any 1031 exchange. At CPEC1031, LLC, our intermediaries have more than two decades of experience working with taxpayers conducting 1031 exchanges of real estate. We can help you prepare for your exchange by putting together the necessary documents and answering all of your questions. Contact us today to learn more about how we can help you defer taxes on the sale of your real property. Our primary office location is in downtown Minneapolis, but we work with clients throughout the state of Minnesota and 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.

© 2021 Copyright Jeffrey R. Peterson All Rights Reserved

How to Use 1031 Exchanges to Compound Wealth

A 1031 exchange can be an excellent tool for building wealth over the long term. In this article, we are going to discuss how a 1031 exchange can help you compound wealth over time.

A Typical Sale

In a typical sale of real estate, the seller is responsible for paying capital gains taxes on the net proceeds from the sale. Depending on the value of the property, this can be a sizable tax bill that the seller has to bite the bullet on. Sometimes this potential capital gains tax bill is so high it can discourage property owners from selling.

The 1031 Exchange Alternative

Section 1031 of the Internal Revenue Code provides an excellent, tax-advantageous alternative to selling property outright. In a 1031 exchange, the seller does not keep their net proceeds. Instead, they reinvest those net proceeds into a new replacement property that is higher in value, equity, and debt compared to their relinquished property. When done correctly, the taxpayer is able to defer their capital gains taxes on the sale.

This allows you to avoid a potentially huge tax bill and also keep your money working for you – compounding interest over time in your new replacement property investment.

Your One-Stop Shop for All Things 1031 Exchange

At CPEC1031, LLC, we provide comprehensive 1031 exchange solutions to all of our clients. With twenty years of experience under our belt, you can trust us with the facilitation of your like-kind exchange. Our qualified intermediaries can prepare all of your necessary documentation, advise you on replacement properties, and answer all of your questions. Contact us today to learn more about the 1031 exchange process and to get your like-kind 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.

© 2021 Copyright Jeffrey R. Peterson All Rights Reserved

How to Defer Capital Gains when Selling Real Estate

No one enjoys paying capital gains taxes when selling real estate. Thankfully, there are several tools available to US taxpayers for deferring or avoiding these capital gains taxes. In this article, we are going to discuss a few ways to avoid capital gains taxes on the sale of real estate.

1031 Exchange

Perhaps the best tool for avoiding capital gains taxes is the 1031 exchange. Under section 1031 of the Internal Revenue Code, a taxpayer is able to defer their capital gains taxes on the sale of real property so long as they roll those proceeds into a bigger property. There are numerous other benchmarks that need to be met, but when done properly, a 1031 exchange can result in 100% capital gains tax deferral.

Alternative Options

If, for some reason, you can’t do a 1031 exchange on your property, you still have some potential alternative strategies, including:

• Claiming a Principal Residence Exclusion

• Deferred Sales Trust

• Gifting Property

Defer Your Capital Gains Tax

If you are looking to defer your capital gains tax on the sale of real estate (and who isn’t), consider a 1031 exchange. At CPEC1031, LLC, our qualified intermediaries have more than twenty years of experience helping taxpayers across the country with their real estate exchanges. We can help you through every step of the exchange process – from start to finish. Reach out to us today to set up your 1031 exchange and defer 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.

© 2021 Copyright Jeffrey R. Peterson All Rights Reserved