What is a 1031 Exchange of Investment Real Estate?

In this article, we are going to get back to basics and explain what exactly the 1031 exchange of real estate is and how it can be beneficial to taxpayers investing in real estate.

What is a 1031 Exchange?

A 1031 exchange is a code section in the Internal Revenue Code that allows people to defer their gains on their appreciated real estate that’s been held for investment or business purposes when they do an exchange into like-kind property that’s also held for investment or business purposes. What that means you are realizing but not recognizing the gain on your sale. In other words, the gain is not currently taxable.

Typically, when you sell an investment property in a standard sale, you will likely have a taxable gain on that sale because you used it for the purposes of generating income. But if you exchange out of your property and into like-kind replacement property, you can defer that capital gains tax burden. This allows you to compound and build your wealth in real estate over time as you can continue to exchange into bigger and better replacement property.

CPEC1031, LLC

At CPEC1031, LLC we have over two decades of experience facilitating 1031 exchanges of all shapes and sizes. We can put our experience to work on your next 1031 exchange and answer all of your questions along the way. Contact our team of qualified intermediaries today to learn more about our full service capabilities and see how we can help you with 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchanges can Help you Take Advantage of Appreciation in the Marketplace

In this article, we are going to talk about how a 1031 exchange can help you reposition your real estate strategy and take advantage of future appreciation in the marketplace.

Inflation Concerns

People are rightly worried about inflation right now, but inflation makes real estate investors look like rock stars because as the value of currency declines against the value of hard assets like real estate, your appreciation in the property goes up.

Repositioning Your Strategy

Many people are repositioning their portfolios by moving to different geographic areas that perhaps have more favorable tax codes. These taxpayers are looking to move their capital to those geographic areas where there will be more opportunity for appreciation. Everyone has a different strategy when it comes to real estate investing and this is a great time to reposition your strategy to take advantage of future appreciation.

A 1031 exchange is the perfect tool for this type of repositioning as it allows you to move your capital around to different geographic areas tax-deferred so long as you satisfy the various 1031 exchange benchmarks.

Minnesota Qualified Intermediary Company

CPEC1031, LLC is a qualified intermediary company that facilitates 1031 exchanges of investment real estate. We can help you defer your capital gains taxes on the sale of real estate under section 1031 of the Internal Revenue Code. Contact our team of 1031 exchange professionals today to learn more about the benefits of section 1031 and whether or not your property meets the criteria for a 1031 exchange. You can find us at our main 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

How can an Owner of Rental Property Benefit from a 1031 Exchange?

Right now, the real estate market is hot and many owners of rental property may be looking for ways of selling their property without having to pay their capital gains taxes on the property. In this article, we are going to discuss how an owner of rental property can benefit from a 1031 exchange.

Why Exchange Your Rental Property?

With the current state of the real estate market, it is a great time to be a seller. Prices are high, inventory is tight, and that leads to a lot of competition among buyers.

As a rental property owner, there are many reasons why you might want to sell your property. Perhaps it’s in a location you no longer want to be in. Maybe there’s a lot of deferred maintenance you’d rather not deal with. Whatever the reason, this is a great time to reposition your portfolio and set the stage for future increases in value. Interest rates are also still at historic lows so it may be a perfect time to sell the assets you have and lever up into bigger and better property. That way, when the tides of appreciation come in, instead of having a small portfolio perhaps you have a much bigger portfolio all going up in value.  

Twin Cities 1031 Exchange Services

If you are searching for 1031 exchange services in the Twin Cities area, you’ve come to the right place! At CPEC1031, LLC we have been facilitating like-kind exchanges of investment real estate for over twenty years. Our qualified intermediaries can walk you through the entire exchange process and ensure you defer 100% of your capital gains taxes when selling investment property. Contact us at our Minneapolis office today to learn more about 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

How Would the Elimination of 1031 Exchanges Impact Investment Real Estate?

Many people have questions about the potential effects of eliminating the 1031 exchange. Hopefully, these effects never become reality, but it’s important to think about them and the potential impacts on the real estate market. In this article, we are going to discuss how the elimination of 1031 exchanges would impact the state of investment real estate.

Loss of State Revenue

It’s important to note how much revenue a state can generate from 1031 exchanges via deed tax, transfer tax, mortgage registration tax, higher property taxes due to greater velocity in the marketplace. These are some of the many benefits of allowing capital to move into the most advantageous sectors of the marketplace via 1031 exchange. If we eliminated 1031 exchanges, these benefits would be significantly curtailed.

Real estate ownership and taxation is different than stock ownership and taxation. With stocks, you only have taxation when you sell and trigger the realization of your gain. Real estate is different. It often takes much more time to sell and people who own real estate pay property taxes for as long as they own their properties. This is another subliminal benefit of 1031 exchanges.

Decrease in Demand

If 1031 exchanges are eliminated, I think we would see a big decrease in demand for real estate. There will be fewer small investors who are trying to climb the investment ladder. Lower property values mean you may not be able to refinance your property when it comes time to do a major capital improvement.

Minneapolis Qualified Intermediaries

At CPEC1031, LLC we focus solely on 1031 exchanges of investment real estate. If you are looking to save capital gains taxes on your next real estate sale, a 1031 exchange may be the best vehicle for you. We have twenty years of experience and can walk you through the entire like-kind exchange process from beginning to end. Contact us today at our primary offices located in downtown Minneapolis to learn more about our 1031 exchange services 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

Why Property Flippers Should Consider 1031 Exchanges

Property flippers are typically not able to 1031 exchange their property. However, property flippers may want to consider changing their tact and engaging in a 1031 exchange rather than a flip. In this article, we are going to talk about why property flippers should consider a 1031 exchange.

Flipped Property Does Not Qualify for 1031 Exchange

In a 1031 exchange, you want to move all of your equity from the sale of your relinquished property into other real estate that’s held for investment or business purposes. We often hear from people who want to flip a property. Unfortunately, flipped property generally does not qualify for 1031 exchange treatment because they are inventory.

The Tax Benefits of a 1031 Exchange

A qualified intermediary can be part of the solution by working with your accountant, attorney, and anyone else on your team to make the business plan such that you can move from being in a high effective tax bracket (like a flipper), to a low effective tax bracket (like someone who holds investment real estate).

When you 1031 exchange your property (and you do it correctly), you can defer 100% of your capital gains taxes on the sale of that property. That’s a huge incentive for property owners who can defer their taxes and exchange up into bigger and better property. It has the added benefit of being good for the economy as a whole.

Twin Cities 1031 Exchange Company

CPEC1031, LLC has been facilitating like-kind exchanges of real estate in the Twin Cities area for over twenty years. Our qualified intermediaries are on hand to help ensure you defer your capital gains taxes on the sale of investment real estate. We can answer all of your questions and guide you through the 1031 exchange process. Reach out to us today at our Minneapolis office to learn more about our service catalog and see how we can help you with your next 1031 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved