What Can a Qualified Intermediary Do For Your 1031 Exchange?

Many people who are new to the world of 1031 exchanges have questions about the role of the qualified intermediary. In this article, we are going to discuss what a qualified intermediary can do for your 1031 exchange.

Guide You Through the Process

The exchange process seems simple on the surface, but there are a wide range of potential pitfalls. A qualified intermediary knows the process inside and out and can make sure you don’t fall prey to any common mistakes.

Prepare Necessary Documentation

As with any real estate transaction, there is a lot of paperwork that goes along with a 1031 exchange of real estate. If you miss a form or mess something up it could jeopardize your entire exchange. A qualified intermediary can take this off of your plate and prepare all of your required documents in preparation for closing.

Answer Your Questions

Every 1031 exchange is unique, and every taxpayer conducting a 1031 exchange has a lot of questions that they may not be able to find answers to online. A qualified intermediary can answer all of the questions you have regarding your 1031 exchange so you feel confident that your exchange will be a success.

Reach Out to a Qualified Intermediary

Want to learn more about deferring capital gains taxes on the sale of investment real estate? Reach out to a qualified intermediary today to walk you through the process. The earlier you get started on your 1031 exchange, the better. Making all the necessary preparations can help ensure that your exchange goes smoothly and that you defer 100% of your gains. At CPEC1031, LLC we have two decades of experience working on like-kind exchanges of real property. Contact us to see if your property qualifies for 1031 exchange treatment.

• 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 Ways to Qualify Your 1031 Exchange Property

If you are interested in pursuing a 1031 exchange, the first thing you need to do is to make sure your property qualifies for 1031 exchange treatment. In this article, we are going to offer up three ways you can qualify your 1031 exchange property to make sure it can be utilized in a like-kind exchange.

Is Your Property Like-Kind Real Estate?

The only property that qualifies for 1031 exchange treatment is like-kind real estate. All types of personal property are disqualified from 1031 exchange treatment. The good news is that most real estate is like-kind to most other types of real estate.

Is Your Property Held for Personal Use?

The next thing you need to consider is how you are holding your property. Is your property held primarily for personal use (like your primary home)? If so, it does not qualify for 1031.

Is Your Property Held for Investment or Business Use?

If your real property is held for investment use or for use in your trade or business, then it meets the basic criteria for 1031 exchange treatment.

Experienced Qualified Intermediaries

At CPEC1031, LLC we focus entirely on 1031 exchanges of investment property throughout the United States. Whether you’re selling an apartment complex, retail space, or some other type of investment real estate, you may be able to defer your capital gains taxes with a like-kind exchange. Let our qualified intermediaries facilitate your exchange. We have more than twenty years of experience in the 1031 exchange industry. Give us a call today at our downtown Minneapolis office to learn about the full range of our exchange services.

• 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 More DST Considerations for Financial Planners & Investors

In a recent article, we talked about three DST considerations for financial planners. Here, we’re going to outline a few more things to consider when dealing with DST wholesalers and syndicators.

Multiple Assets, Multiple States

It’s important to consider whether the DST has more than one asset and if those assets are in more than one state. When you own real estate in different states, that may require you to make a state tax filing for every state that the DST has an asset in. If there is a DST comprised of 12 different properties in 12 different states, that may require your CPA to charge you for filing a tax return in each of those 12 states.

Cash Reserves

Often, DSTs will have cash reserves set aside for operational expenses. If your 1031 exchange funds are side-tracked to fund those cash reserves rather than being redeployed into the real estate, that could trigger some gain. Taxpayers often want their exchange funds to be used exclusively to fund the purchase of the real estate (the DST) and they’ll fund out of their own pocket any amounts due for cash reserves so that their exchange funds are ear-marked specifically for the real estate purchase.

Planned Changes

Another thing to talk to your DST sponsor about is to see if there is any pre-arranged plans or designs to change the DST after you buy it. Will there be a cash-out refinance under which you could get back some of your equity? Will there be a conversion to an UPREIT before you’ve held that interest in the real estate for very long? If there are going to be any material changes like this, that’s something you want to know because that may change the defensibility of your real estate holding.

Get Your Exchange Started

If you’re ready to get your 1031 exchange started today, look no further than the team at CPEC1031, LLC! With over two decades of experience, our like-kind exchange professionals can guide you through the ins and outs of your 1031 exchange. Reach out to our qualified intermediaries today to learn more about our services and see if a 1031 exchange is right for you. Our office is located in Minneapolis, but we work with clients 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

Can You Use Your 1031 Exchange Funds for a Contract for Deed Down Payment?

Yes, generally you can purchase the equitable title on a contract for deed to complete your 1031 exchange and you can use the exchange funds for the initial down payment.

It may depend on if the ‘equitable title’ to the real property will be conveyed to the contract for deed vendee upon the conveyance of the contract for deed. Oftentimes equitable title is shifted to the vendee as the owner of property for federal tax purposes because the vendee has possession of the property, bears the risk of loss from damage or destruction of the property and pays the property taxes and insurance expenses (either directly or through the payments under the contract for deed).

For federal tax purposes the vendee on the contract for deed generally is deemed to be the equitable owner, and the vendor is merely holding bare legal title as an enforcement mechanism to compel payments (creditor) and full performance of the vendee. [Contracts can differ depending on terms – but this is generally the case.]

Contact CPEC1031, LLC

Looking to defer taxes on the sale of investment property? A 1031 exchange may be a good fit for you! For over two decades, the qualified intermediaries at CPEC1031, LLC have been facilitating like-kind exchanges of investment real estate. Let our 1031 exchange professionals assist you with your next real estate exchange. Contact us today at our Minneapolis offices to learn more about our exchange services and whether or not your property qualifies. We facilitate exchanges throughout the state of Minnesota and across 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

The Qualities of a Perfect 1031 Exchange Property

When it comes to 1031 exchanges of real estate, the qualities of your property matter a great deal. In this article, we are going to talk about the qualities of a perfect 1031 Exchange property.

Property Quality Matters

The fact of the matter is that there is no perfect 1031 exchange property. Every taxpayer’s situation is different and there are many types of properties that work well in a 1031 exchange. However, just because the perfect property doesn’t exist doesn’t mean that you shouldn’t strive for perfection in your 1031 exchange.

It is essential to examine the qualities of your property when considering a 1031 exchange because not all property qualifies for like-kind exchange treatment. For example, all personal property (such as your primary residence) is barred from 1031 exchange. You need to make sure that the property you wish to exchange is, first and foremost, real estate held for a qualifying purpose. That qualifying purpose is typically defined as for use in your trade or business, or for investment. If your property has these qualities, there’s a good chance that it will qualify for a 1031 exchange.

Get Help with Your 1031 Exchange

The 1031 exchange process can be complicated. It’s important to work with a qualified intermediary who understands the ins and outs of section 1031 of the Internal Revenue Code. The qualified intermediaries at CPEC1031, LLC have been working with taxpayers on their like-kind exchanges for more than two decades. During that time, we’ve facilitated exchanges of all shapes and sizes. Let us put our extensive experience to work for you on your next 1031 exchange of real estate. Contact us today at our Minneapolis offices. We serve clients throughout Minnesota, as well as the entire 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