Are You a Good Candidate for a 1031 Exchange?

Many real estate investors are curious about the tax-saving benefits of a 1031 exchange. But in some situations, it can be difficult to determine whether or not you are a good candidate for a 1031 exchange. In this article, we are going to talk about how to figure out if your property is a good candidate for 1031 exchange treatment.

How 1031 Exchanges Work

A 1031 exchange is an alternative to a traditional real estate sale in which the taxpayer moves their net proceeds from the sale of one property into a new replacement property. When done correctly, the taxpayer can defer their capital gains taxes on the sale.

How to Determine 1031 Exchange Eligibility

Deferring your capital gains taxes on the sale of investment property sounds great, but not all types of property qualify. Here are a few basic factors that can help determine if your property is a good candidate for 1031 exchange:

  • Qualifying Purpose. All property involved in a 1031 exchange needs to be held for the qualifying purpose of investment or business use. That means personal property cannot be used in a 1031 exchange.

  • Like-Kind Property. All property involve din a 1031 exchange also needs to be like-kind, which includes most real estate.

  • Equity, Value, Debt. In order to successfully defer all of your capital gains taxes, your replacement property also needs to increase in value, equity, and.

Start Your Real Estate Exchange

Still have questions about whether or not your property qualifies for 1031 exchange treatment? Contact the qualified intermediaries at CPEC1031, LLC today to learn more about the process. We have been facilitating 1031 exchanges for over twenty years and can help you through every stage of the like-kind exchange process.

  • 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 Your Relative Can’t Act as Your 1031 Exchange Intermediary

When engaging in a 1031 exchange, it’s always a good idea to work with a qualified intermediary. However, not just anyone can act as your qualified intermediary. In fact, some people are outright disbarred from acting as your qualified intermediary. In this article, we are going to talk about why your relative cannot act as qualified intermediary on your 1031 exchange of real estate.

The Related Party Exclusion Rule

In any 1031 exchange of investment real estate, there are certain parties that the IRS says cannot act as your qualified intermediary. Some of those excluded parties are:

  • Related Parties – anyone related to you by family or blood.

  • Business Agents – anyone directly affiliated with your business affairs (CPA, accountant, attorney, etc.)

  • Your employees

  • Your Realtor

Any party who falls into one of the above categories over the previous two years cannot act as your intermediary.

Find a Qualified Intermediary for Your Exchange

If you can’t work with any related parties, who should you work with on your 1031 exchange? Your qualified intermediary should be an independent third-party who has no previous association with you. It’s best to work with a qualified intermediary who focuses their business solely on facilitating 1031 exchanges.

Contact a 1031 Exchange Intermediary

At CPEC1031, LLC our qualified intermediaries have been helping taxpayers with their 1031 exchanges of investment real estate for more than twenty years. 1031 exchanges are all we do. Contact us today to learn more about the 1031 exchange process and how we can help facilitate your 1031 exchange by acting as qualified intermediary. 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

4 Benefits of a 1031 Exchange Beyond Tax Deferral

1031 exchanges are a fantastic way to defer your capital gains taxes when selling qualifying real estate. But there are many more benefits to 1031 exchanges that go beyond tax deferral. In this article, we are going to discuss six benefits of a 1031 exchange that go beyond deferring capital gains taxes.

  1. Increased Potential Income. Taxpayers conducting 1031 exchanges can sell their appreciated real estate and exchange into income-producing property with potentially greater cash-flow and appreciation.

  2. Market Maneuverability. A 1031 exchange is a great vehicle for changing property types, allowing taxpayers to exchange out of and into different sectors of the real estate market. For example, a taxpayer could 1031 exchange out of an apartment building and into a retail property.

  3. Relocation. 1031 exchanges are allowed between states, so you can use them to exchange out of your current state and into a different state with lower tax rates, for example.

  4. Consolidation. If you own multiple properties and you want to simplify your situation, a 1031 exchange can help you exchange out of those multiple properties and into a single property.

CPEC1031, LLC – 1031 Exchange Company

At CPEC1031, LLC we have been facilitating 1031 exchanges of all types for over twenty years. Our team of qualified intermediaries can help guide you through all the details of your next 1031 exchange. Contact us today to learn more about the 1031 exchange process and see how we might be able to assist you in deferring your capital gains taxes. You can find us at our primary offices 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

1031 Exchange Rental Property Best Practices

With any 1031 exchange, there are various benchmarks you need to meet and rules you need to abide by in order to defer your capital gains taxes. In this article, we are going to talk about some best practices when dealing with 1031 exchange rental property.

Rental Property Best Practices

Some taxpayers purchase replacement properties that they may one day move into, but for the first few years after completing their exchanges, they are careful to actually rent the replacement properties out for a substantial period of time to satisfy the requirements for their 1031 exchange. How long should they rent out their properties? The longer the better. 

It’s interesting that the rules for excluding your gain on the sale of your personal residence under IRC Section 121 have special requirements and allowances for properties that you previously 1031 like-kind exchanged into. It’s also interesting that the IRS has created safe harbors for replacement properties that are put into rental pools, and still allow the taxpayer to use the property on a limited basis for personal use.

Defer Taxes with a 1031 Exchange

A 1031 exchange can help you defer your capital gains taxes on the sale of investment real estate. The qualified intermediaries at CPEC1031, LLC can help guide you through the entire 1031 exchange process and answer all of your questions. We have over two decades of experience working on 1031 exchanges of all types. Contact us today at our Minneapolis office to learn more about the like-kind exchange process and see if your property qualifies.

  • 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

 

When to Park Your 1031 Exchange Property

We’re currently experiencing a hot seller’s real estate market, which can make it difficult for taxpayers looking to find replacement property for their 1031 exchanges. In this article, we are going to discuss when it’s advantageous to park your 1031 exchange property.

Parking Your 1031 Exchange Property

If you are having trouble locking up a replacement property for your 1031 exchange, what you need to do is a reverse 1031 exchange. In a typical reverse exchange, CPEC1031 acting as your intermediary sets up an Exchange Accommodation Titleholder (“EAT”). This is typically an LLC wholly owned by the intermediary that acquires the new property for you. The EAT purchases the replacement property and holds it so nobody else can get it. The IRS has laid out a safe-harbor in revenue procedure 2000-37. This is basically a recipe on how to do a reverse exchange. The best part of this deal (procedure) is that you can have your intermediary take down this property through the EAT. The bad side is, your intermediary can only park (own) this property and hold it in the EAT for up to 180 days under the safe-harbor. That means, you basically have six months to unload or dump your old relinquished property.

CPEC1031, LLC – 1031 Exchange Company

At CPEC1031, LLC we focus exclusively on 1031 exchanges under section 1031 of the Internal Revenue Code. We have over twenty years of experience facilitating like-kind exchanges of investment real estate. Let us put our experience to work for you on your next 1031 exchange. Start realizing the tax saving benefits offered by the 1031 exchange. Contact us today to learn more about our 1031 exchange services. You can find us at our primary offices 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

Defer the tax. MAXIMIZE your gain.

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