1031 Exchange Location Considerations

There are many questions surrounding the rules and regulations that govern 1031 exchanges of investment real estate. Some of the most common questions we get are about location. In this article, we are going to talk about some location considerations when it comes to 1031 exchanges of real estate.

Property Within the United States

A 1031 exchange can only be done between property located in the United States. That means both your relinquished property and your replacement property need to be US property. Foreign property does not qualify for 1031 exchange treatment. Keep in mind that your property also needs to be held for a qualified purposes (i.e. investment or business use) and not personal property.

Exchanges Between States

Another common question we get is whether or not you can exchange property between different states. In short, yes. You can exchange a relinquished property in one state for a replacement property in another state. You could sell an duplex in Minnesota and exchange into a retail space in Florida. Exchanging between different states is a very common practice. It can be especially beneficial when taxpayers wish to move their investment into a more tax-advantaged state. Whatever the reasoning, it is perfectly acceptable to 1031 exchange property from one state to another.

Minnesota Qualified Intermediary Services

At CPEC1031, LLC we provide 1031 exchange services to taxpayers looking to sell qualifying real property and defer their taxes. We have been working in the 1031 exchange industry for more than two decades. Contact our team today to learn more about our wide array of 1031 exchange services and find out how we can help you defer your capital gains taxes. Our office is located in Minneapolis. We provide 1031 exchange services to 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Should I Wait Until Next Year to do my 1031 Exchange?

Timing is essential in any 1031 exchange. Some people wonder when they should conduct their exchange. In this article, we are going to discuss whether or not you should wait until next year to conduct a 1031 exchange.

Timing Considerations

There are many timing-related considerations to keep in mind when conducting a 1031 exchange. First, it’s important to remember your 1031 exchange time limits. You only have 180 days from the start of your exchange to the finish line. The first 45 days of that time period is your identification period. You can start your 1031 exchange whenever you’d like, but bear in mind that these time deadlines are hard and fast.

Tax Reporting Considerations

There are some tax reporting considerations to weigh if you’re debating whether to do your exchange this year or to wait until the following year. When your exchange finishes will have an impact on when and how your report the exchange to the IRS. It’s important to work closely with your CPA or tax advisor on this matter to ensure everything goes smoothly.

Contact CPEC1031, LLC Today

Contact CPEC1031, LLC today to get your 1031 exchange off the ground! If you’ve got investment real estate that you’re looking to sell but want to avoid a capital gains tax burden, a like-kind exchange may be a good fit for you. The qualified intermediaries at CPEC1031, LLC have over two decades of experience facilitating 1031 exchanges of all shapes and sizes. Reach out to our team to learn more about the intricacies of section 1031 and see if your property qualifies. Our offices are located in downtown Minneapolis, but we provide exchange services to taxpayers throughout 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

3 DST Considerations for Financial Planners

DSTs can be complicated. In this article, we are going to talk about three things financial planners should consider when approaching DSTs.

Leverage

One important thing to consider is whether or not there is leverage on the replacement investments and is that debt allocable to the co-purchasers in the DST? Some DSTs are 50% levered – the underlying assets already have debt on them up to 50%. So when you put a dollar into that DST and you’ve allocated the 50% leverage, your real buying power is 2 dollars for every dollar that you put in. That’s going to be important when you’re determining your ceiling under the 200% rule because the value of what you’re buying isn’t just the equity that you’re putting in, but also the debt that’s allocable to you. Be aware that if you’re buying a leveraged DST, that DST may take up more bandwidth under the 200% rule than you had anticipated.

Tax Documents

The next thing to think about is what kind of tax document the DST sponsor is going to send you for completing your taxes. You may receive an alternative 1099 while you’re in the DST stage. If that DST then later converts under a 721 contribution to an UPREIT, you may eventually receive a K-1. So talk to the DST sponsor and understand what tax documents you’ll be receiving.

Identification

Another thing we need to discuss is identification. You still need to identify the underlying real estate that’s comprised of this DST. You want to ask the DST sponsor if they can provide you with the address, legal description, county tax assessor’s numbers, etc. You want to be able to clearly and unambiguously describe that real estate and it would be wonderful if the sponsor could simply provide you an exhibit that gives the full description of the underlying assets. You can append that to you identification form to fully identify what you’re getting as part of the DST.

1031 Exchange Company

The 1031 exchange professionals at CPEC1031, LLC have been working with taxpayers on their like-kind property exchanges for more than twenty years. Our team has the resources and skills needed to make sure your exchange is a success. We can walk you through the process step by step and ensure all of your questions are answered as they arise. Contact us today to learn more about our services. You can find us at our downtown Minneapolis offices. Be aware that we provide 1031 exchange services to taxpayers throughout 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

How to Treat Unsecured Debts in a 1031 Exchange

Many people have questions about the tax treatment of unsecured debts in a 1031 exchange, especially if the (requisite) satisfaction of which appear to not be tied contractually to the sale of the relinquished property.

Boot gain may be realized in an exchange paying debts not secured by a mortgage or deed of trust on the relinquished property.

It may be beneficial to discuss ways to create a contractual nexus between the sale closing and the payment of the debts. This would involve including a material and substantial requirement in the purchase agreement with the buyer; or restating the notes with your lenders to change the terms and add a requirement of satisfaction upon sale of the subject real estate.

Defer Capital Gains Tax with a 1031 Exchange

A 1031 exchange can help you defer capital gains tax on the sale of investment real estate. A qualified intermediary can guide you through the exchange process and make sure everything goes off without a hitch. At CPEC1031, LLC we have been working on like-kind exchanges for over twenty years. Give us a call today to learn more about the tax-saving benefits of a 1031 exchange. You can find us at our primary offices in downtown Minneapolis. We provide like-kind exchange services to taxpayers 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

How to Tell if Your Property Does Not Qualify for 1031 Exchange

There are many factors to consider when considering a 1031 exchange, but the first and most important is determining whether or not your property even qualifies. In this article, we are going to talk about how you can tell if your property does not qualify for 1031 exchange treatment.

Some Property is Disqualified Outright

Some property is disqualified outright from Section 1031 of the Internal Revenue Code. Specifically, personal property cannot be used in a 1031 exchange transaction. That means you cannot exchange any property that is used for personal reasons. This includes your primary residence, and other items of non-real property used for personal use like artwork, agricultural property, and aircraft.

Qualified Investment Real Estate

All property included in a 1031 exchange must be real estate that you hold for a qualified purpose. Specifically, that qualifying purpose is investment or business use. Some common examples of property used in a 1031 exchange include: apartment buildings, duplexes, hotels, retail space, and more. You are allowed to exchange into and out of different business segments, as well as different states and locales. So long as you ensure that both your relinquished and your replacement properties fit the definition of qualified investment real estate.

Start the Like-Kind Exchange Process Today

Get started with the like-kind exchange process today by contacting CPEC1031, LLC. Our team of qualified intermediaries can walk you through all the intricacies of the 1031 exchange process, making sure you are well informed along the way. There are many potential pitfalls during the exchange process, and our intermediaries will make sure that you have all the information needed to avoid them. Reach out to our team today to learn about the exchange process and see how we can help you defer taxes with a 1031 exchange of reach estate.

• 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved