Why a 1031 Exchange Might be Right for You

When you’re looking to sell a piece of property, you have several options. You could sell the property in a traditional sale and pay any necessary taxes. Or you could defer those taxes by utilizing a 1031 exchange. In this article, we are going to explain why a 1031 exchange of investment real estate might be the right option for your property.

Why is a 1031 Tax Exchange Good For You?

The key benefit is that your capital gains tax liability that would otherwise become due is deferred under Section 1031 of the code. The main value to investors is that as long as your money continues to be re-invested (over and over again) in other qualifying like-kind property, your portfolio can continue to grow in value (without taxation). You can use the money that would otherwise go to the government in taxes to buy more replacement property, allowing you to buy more and bigger properties.  Over time this tax-free compounding has a tremendous wealth building power

Get Your 1031 Exchange Started

Get your 1031 exchange started today by contacting the qualified intermediaries at CPEC1031, LLC. Our team of intermediaries has been facilitating 1031 exchanges for more than twenty years. We have the experience needed to ensure your 1031 exchange is a success. Reach out to us today to discuss your 1031 exchange of investment real estate. We can answer your questions and prepare all of your documentation prior to closing. Contact us today at our Minneapolis offices to learn more about the 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

Hot Commercial Real Estate Trends in 2022

Many people are interested in getting into the business of real estate investing because they see it as a sane place to invest their money. They don’t want to be subject to the whims of the stock market going up and down. Instead, they want a more stable investment opportunity. In this article, we are going to discuss a couple of hot investment trends we’re seeing in the commercial real estate industry.

The Housing Hack

What we see in this marketplace right now is a huge amount of interest in what we call the “housing hack.” Young entrepreneurial Millennials are figuring out that they need to start preparing for their future by building their wealth in real estate. To that end, many young investors are looking for duplexes, tri-plexes, or four-plexes that they can owner/occupy a portion of and rent out the rest. They’re getting into the business of real estate like so many past generations.

VRBO & AirBnB

Another trend we are seeing lately are people looking for VRBO / AirBnb type investments. Investors are looking for opportunities to purchase investment or business real estate in desirable vacation areas of the state of Minnesota.

CPEC1031, LLC

If you’re looking to defer capital gains taxes on the sale of investment real estate, a 1031 exchange may be right for you. At CPEC1031, LLC we have more than twenty years of experience facilitating like-kind exchanges of all shapes and sizes. We can help you through all the details of your exchange. Contact us at our 1031 exchange offices in downtown Minneapolis today to learn more about our services and how we can help 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

Safe Harbor vs. Non Safe Harbor Reverse Construction Exchanges

In a reverse construction exchange, can you use your 1031 exchange proceeds to buy raw land and then construct improvements on that land? That’s a great question that we’ll be tackling in this article.

In a 1031 exchange, a general rule of thumb is you can’t exchange into property you already own because it wouldn’t be an exchange. So the best course of action is to have the qualified intermediary buy the new land and hold title to it while the improvements are constructed. This allows the taxpayer to exchange into, not only the raw land, but also the improvements that are constructed on the land.

Safe Harbor Exchange

Now, there are a couple of ways to go about this. The first is a safe-harbor 1031 exchange. This is the safest and easiest method, but any improvements you want to construct on the land must be completed within 180 days. There are only so many improvements you can construct during that amount of time.

Non Safe Harbor 1031 Exchange

The more complex and sophisticated method would be to do a non-safe harbor reverse exchange. With this option, you would purchase your replacement property (the raw land) and construct improvements on it first. Then, when construction is complete, you can sell your relinquished property after the fact – hence the “reverse” 1031 exchange.

Start Your 1031 Exchange Today!

Start your 1031 exchange today with CPEC1031, LLC and start realizing the tax-saving benefits of a like-kind exchange. At CPEC1031, we have over twenty years of experience working on 1031 exchanges of real estate. Let us put that experience to work for you on your next like-kind exchange. We can walk you through the entire process and make sure you are fully prepared when it comes time to close you’re your property. Contact us at our Minneapolis offices today to 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

The Importance of Involving an Experienced Lender in the 1031 Exchange Process

There are many important players that you want to involve in your 1031 exchange. In this article, we are going to explain why it’s so important to work with a nimble, creative lending on your 1031 exchange of real estate.

1031 Exchange Rules & Benchmarks

When you’re doing a 1031 exchange you typically try to buy a property of equal or greater value, you try to reinvest all of your equity into the new property, and to the extent that you paid off debt on the old property, you want to offset the debt relief that you enjoyed on the sale with new debt of at least equivalent value.

Entrepreneurial people are often not happy making an unexciting lateral move between investment real estate. Rather, savvy investors often try to build their wealth by levering up and exchanging into a more expensive property using their debt plus the equity they’ve accumulated in their relinquished property.

Having a creative, nimble lender who can create these opportunities and finance these acquisitions is absolutely essential to a successful 1031 exchange.

1031 Exchanges of Commercial Real Estate

CPEC1031, LLC offers 1031 exchange services to clients throughout the state of Minnesota and across the United States. Our team of 1031 exchange officers has over two decades of experience working on like-kind exchanges of real estate. Let us put our experience to work on your next 1031 exchange. We can help guide you through the process and make sure all of your questions are answered along the way. You can find us at our Minneapolis offices to learn more about our 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

Can AirBnB & VRBO Properties Qualify for 1031 Exchange Treatment?

AirBnB, VRBO have become quite popular in recent years, but many taxpayers may wonder if these types of property qualify for 1031 exchange treatment.

IRS Safe-Harbor

The short answer is yes, these types of AirBnB and VRBO properties can qualify for 1031 exchange so long as they are held long enough for investment or business use. The IRS came out with safe-harbor that directly addresses these types of property. In that safe-harbor, the IRS states that they will test each of the two 12-month periods after you acquire the property. In each of the two 12-month periods you have to have a minimum of 14-days of rental, and your personal use can’t exceed more than 14 days in each of the 12-month periods, or more than 10% of the time the unit was rented out.

Personal Use of the Property

Hypothetically, let’s say you 1031 exchange into a property that’s located in the Smoky Mountains of Tennessee, where the rental season is really long. You could feasibly rent out the property for 300 days per year. In that specific scenario, you could use the property for personal use for up to 29 days in each of the two 12-month periods. That being said, the safest advice is to steer clear of any personal use in those two 12-month periods. Don’t give the IRS any reason to doubt that your property completely satisfies the requirements for 1031 exchange.

CPEC1031, LLC

Contact us with any additional questions you have about the 1031 exchange process. Our qualified intermediaries have been helping taxpayers with their 1031 exchanges for more than two decades. Reach out to us to get your 1031 exchange off the ground!

• 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