Is it Possible to Partially Cash Out Your 1031 Exchange

With the current strength of the real estate market, many real estate investors face steep capital gains taxes when selling property. That makes 1031 exchanges very attractive as they allow a taxpayer to defer those capital gains taxes so long as you move all of your proceeds into a new property. But some taxpayers may want to pocket some of those net proceeds in addition to deferring their taxes. Is it possible to have the best of both worlds? In this article, we are going to talk about whether or not it’s beneficial to do a partial cash-out on your 1031 exchange.

Cash Boot

The short answer is, yes – it is possible to do a partial 1031 exchange and pocket some of the sales proceeds. But remember, any cash that you receive during the 1031 exchange process is considered boot and is subject to capital gains taxes. The amount of cash boot you receive and whether or not it will still be beneficial to conduct an exchange depends on your specific property and situation. It’s important to consult with your tax advisor before making a decision.

Real Estate Exchanges in MN

Real estate exchanges are great for individual taxpayers (because they allow you to defer capital gains taxes), as well as the economy as a whole. Any US taxpayer can avail themselves of the benefits of section 1031, so it’s always worth considering when you’re looking to sell real estate. With twenty years of experience, our team has the skills needed to accomplish the goals of your 1031 exchange. Contact our qualified intermediaries today to learn more about our services and to set up a time 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

3 Tips to Avoid Failure with your 1031 Exchange

There are a lot of things that can go wrong with a 1031 exchange of real estate if you’re not careful. If your exchange fails, you will not be able to defer your capital gains taxes on the sale, so it’s important to set yourself up for success as much as possible. In this article, we will offer some great tips for not letting your 1031 exchange fail.

Sign Before Your Close

Your 1031 exchange documents must be signed on or before the closing date for the sale of your relinquished property. After the sale of the relinquished property, it is too late to set up a like-kind exchange.

Be Careful with Your Expenses

Expenses can be tricky in the realm of 1031 exchanges. Some expenses can be paid with the net proceeds, while others cannot. Consult with an intermediary about these expenses before closing.

Same Taxpayer Requirement

Remember, the same taxpayer who sells the relinquished property must acquire the replacement property. A common example occurs with recently married couples. In a 1031 exchange, you can’t sell a property by yourself and then acquire a new property jointly with your spouse.

Contact a Qualified Intermediary

At CPEC1031, we have more than twenty years of experience working with clients on their like-kind property exchanges. Our intermediaries can help guide you through the 1031 exchange process, preparing your documentation, and answering your questions every step of the way. Let us help you through the ins and outs of your 1031 real estate exchange. Contact us today at our office in downtown Minneapolis to learn more about our services and get your 1031 exchange set up.

• 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 with Gifted Property – Important Things to Remember

Have you received property as a gift? Is the property valuable? Do you think you might sell the property in the future a big profit? You may be wondering how gain is calculated when you sell property that you received as a gift.

How to Save Money on Taxes

When you sell a property (such as a capital asset like land), the difference between the sale price and the seller’s basis in your property (which is usually its previous cost), is either a capital gain or a capital loss.

A capital gain occurs when your property sells for more than your basis. A capital loss occurs if your property sells for less than your basis.

What is Your Basis?

When you are gifted a property, you take the property with a carry over basis.  That means that your basis is the same as the basis of the person who gave it to you.

Another way of saying this is your carry-over basis (as the recipient or donee of the gifted property) is the same basis as your donor’s; the basis is simply shifted over when the gift is made to you.  [IRC Section 102  Gifts and Inheritances of property are not included in the gross income of the donee at the time of the gift if donor was acting out of love, affection, admiration, respect, etc.]

• 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

Thinking of Selling a Commercial Property? Consider a 1031 Exchange!

In a hot seller’s market, many property owners get excited to sell their real estate and make a good chunk of change. However, with dollar signs in their eyes, many property owners don’t fully consider the capital gains taxes that they’ll owe on such a sale. A 1031 exchange can help you defer these capital gains taxes. In this article, we are going to talk about why you should always consider a 1031 exchange if you’re thinking of selling real property.

The Many Benefits of a 1031 Exchange

1031 exchanges are not for every situation, but they’re always worth a look when you’re getting ready to sell a piece of real estate. Section 1031 of the Internal Revenue Code allows any US taxpayer to defer their capital gains taxes on the sale of real estate so long as they meet certain requirements, such as:

• The property involved in the transaction must be like-kind

• The property must be held for investment or business purposes (not for personal use)

• The taxpayer must reinvest their sales proceeds into a replacement property

This allows you to avoid a big tax bill and keep your money compounding wealth over time in a newer, bigger replacement property.

Tax-Deferred Exchanges

With over two decades of experience under our belt, we have the skills and experience needed to ensure your 1031 exchange runs smoothly. Our qualified intermediaries can help you prepare 1031 documents, advise you on replacement property identification, and answer all of your questions along the way. Contact us today at our downtown Minneapolis office to learn more about how you can save money on a tax-deferred 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

Why You Can’t Access Your Sales Proceeds in a 1031 Exchange

In any 1031 exchange, it is absolutely essential to keep your hands off of your exchange funds. But why is that? In this article, we are going to discuss why the taxpayer conducting the exchange cannot have access to their exchange funds at any point during the 1031 process.

The Importance of Keeping Funds Separated

In order to defer 100% of your capital gains taxes in a 1031 exchange, you need to redeploy all of your sales proceeds from your relinquished property into your replacement property. If, at any point throughout the 1031 process, you receive any of these proceeds, you will recognize gain and be responsible for paying taxes. To avoid this, you want to keep your paws off of your exchange funds at all times throughout the process.

How to Keep Funds Separated

The best way to keep your funds separated is to work with a qualified intermediary. Your intermediary can keep the money safe for you in a segregated bank account – where the funds will sit until you are ready to redeploy them into your replacement property.

CPEC1031, LLC

If you are considering a 1031 exchange, reach out to a qualified intermediary who can help guide you through the process. At CPEC1031, we have more than two decades of experience working with taxpayers from across the United States on their like-kind exchanges of real property. Contact us today at our downtown Minneapolis office to discuss the details of your real estate exchange and start deferring 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved