Why It’s Important to Work with an Experienced Qualified Intermediary

Unfortunately, the qualified intermediary industry is completely unregulated. Anyone can hold out their hat and proclaim themselves a qualified intermediary. That leads to a lot of slipshod work being done by people who don’t understand the forms that they’re filling out. Many inexperienced intermediaries also encourage taxpayers to engage in 1031 exchange practices that just don’t work.

For these reasons and more, it’s important to know who you’re dealing with and only work with a seasoned qualified intermediary with a successful track record. Make sure you work with a qualified intermediary with a proven track record of success and many years of experience facilitating 1031 exchange just like yours.

Consider a 1031 Exchange

If you own investment or business real estate and are thinking about selling in the near future, consider a 1031 exchange. With a like-kind exchange you can defer your capital gains tax burden when selling real estate that qualifies under section 1031 of the IRC. In order to qualify, your property needs to be held primarily for use in your trade or business or for investment purposes. If you want to learn more about the tax-saving benefits offered by section 1031, contact the qualified intermediaries at CPEC1031, LLC today. Our team has decades of experience and can help you through 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

Do Vacation Homes or Second Homes Qualify for 1031 Exchange?

The 1031 provision of the Internal Revenue Code is for real property held for investment or for use in your trade or business. That goes for both the relinquished property and the replacement property. 

Let’s say that you sold a duplex in Uptown Minneapolis and made a lot of money on it. You take your money down to Tennessee and buy an AirBnB intermittent rental property. You may be inclined to go down and utilize that new rental property for yourself from time to time. There has been a lot of litigation between the IRS and taxpayers about this issue.

In a case called Moore v. Commissioner, the IRS really took a taxpayer to task because the taxpayer sold a lake cabin that had never been used for investment or business and he purchased another such lake cabin as his replacement property. The IRS more or less made an example out of this taxpayer. After that, the IRS created a safe harbor that outlined their thoughts on investment or business property. Under this safe harbor, any intermittent rental property used in a 1031 exchange must be rented out at least 14 days in each of the two 12 month periods after you purchase the property. In addition to that, your personal use of that rental property cannot exceed either 14 days in each of the two 12 month periods, or not more than 10% of the time the unit was rented in each of the two 12 month periods.

Let’s say that property in Tennessee was rented out for 300 days in a particular year. You could then use the property for personal use for 29 days that year because it’s less than 10% of the time it was actually rented. So you’re kind of on 1031 probation for two 12 month periods if you do a 1031 exchange involving intermittent rental property.

Exchange Your Investment Property & Defer Your Capital Gains Taxes

Utilize section 1031 to defer your capital gains taxes and build your wealth in a continuing investment property. Any US taxpayer can do a 1031 exchange on qualifying like-kind real estate. Get a jump on the 1031 process by contacting a qualified intermediary at CPEC1031, LLC. Our team can review the details of your transaction and determine whether you are a good candidate for 1031 exchange. We have over twenty years of experience in the 1031 exchange industry – facilitating exchanges in 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

How to Get the Full 180 Day Exchange Period When You Do a 1031 Exchange at the End of the Year

In a 1031 exchange, you have 180 days to complete your exchange. If you’re closing near the end of the calendar year, you don’t get your full 180 days if the due date for the filing of your federal income tax return pops up within that 180 day period. What a lot of smart real estate agents and brokers do is send an email to the client (CCing their accountant) that informs them that they may want to file an extension for their tax return in order to get full use of their 180 day exchange period. Remember – you can’t extend the 180 day exchange period. That is set in stone. But you can extend the due date of your federal tax filing. Doing so will allow you to utilize the full extent of your 180 day exchange period.

Take Advantage of Section 1031

If you are selling real estate that’s held primarily for investment or business purposes, take advantage of section 1031 and defer your capital gains taxes on the sale! CPEC1031, LLC offers qualified intermediary services to clients throughout the United States who want to avail themselves of the benefits of a 1031 exchange. With more than two decades of experience, our team can provide you with the attention and care that your transaction requires. Reach out today to learn more about the benefits of the 1031 exchange process and how we can help you get started.

• 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

How to Build Enormous Wealth with 1031 Exchanges

The most successful taxpayers who utilize 1031 exchanges are constantly thinking about their next exchange. These taxpayers don’t start and stop their 1031 exchange – they live the exchange all the time.

Theoretically, you can start with a single-family rental property, and exchange that into a duplex. After a while you can parlay that into an 8-unit property. When you’ve got your bearings, you can then exchange that 8-unit for a 24-unit property. Before you know it, you could be up to 100 units. You can use 1031 to build your wealth without the drag of taxation. 1031 allows you to accumulate an enormous amount of wealth because you can reinvest your equity and leverage other people’s money. As you build your skills in the investment real estate industry, lenders will be willing to take a greater risk on you, allowing you to continue to build your wealth and chain together multiple 1031 exchanges.

Maximize Your Gain By Deferring Taxes

With a successfully executed 1031 exchange, you maximize your gain by deferring your tax burden. This can save you a lot of money and, even better, keep that money working for you in a continued investment. Many US taxpayers have availed themselves of the benefits of section 1031 of the Internal Revenue Code and you can too! However, there are strict rules you must abide by in order to complete a successful exchange of real estate. A 1031 intermediary can help ensure that you have all the necessary details in line before you even begin your exchange. Call CPEC1031, LLC today to learn more about the like-kind exchange 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

Bridging the Value Gap in a 1031 Exchange

In a typical 1031 exchange, the taxpayer sells their property, parks their money with the qualified intermediary and then starts looking for their replacement property. But what if the replacement property they find is $130,000 less valuable than the relinquished property? How can you fix that gap in value?

If the property you’re buying is an ugly duckling and could use some work, you could build improvements in a build-to-suit exchange. The intermediary can form an LLC and acquire the property while the taxpayer arranges for the construction to occur. These improvements need to be finished within 180 days. Many people think they can buy the replacement property and then remodel it. Unfortunately, the IRS takes the position that once you own the property, any improvements that you make to it post-exchange don’t count for 1031 purposes.

There are two ways to fix that problem:

1. You can go to the seller and ask them to do the $130,000 of improvements to the property before the sale. The seller is almost certainly NOT going to agree to that, as it’s a very risky endeavor on their end.

2. You can go through a qualified intermediary who can come in as an exchange accommodation titleholder and hold the property while you arrange for the remodeling.

In any case, you want to make these improvements so that you can be sure that your replacement property is minimally equivalent in value to your relinquished property.

Exchange Your Investment Property in a 1031 Transaction

Exchange your investment or business property in a 1031 transaction and defer your capital gains taxes! The intermediaries at CPEC1031, LLC are here to help you navigate the details of your next like-kind exchange. We can help prepare all of your required documentation and work with your CPA, real estate broker, or other members of your team to ensure that your exchange is a success. Our offices are located in the heart of downtown Minneapolis. We work with taxpayers conducting exchanges of real estate 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved