1031 Exchanges with Seller-Back Financing Involving a Promissory Note

Dealing with seller-back financing involving a promissory note in a 1031 exchange can be tricky. One potential solution is to have the taxpayer/seller instruct the buyer to make the promissory note in favor of the qualified intermediary. This allows the qualified intermediary to receive all of the proceeds (including the seller-back note). Before the closing of the Replacement Property, the taxpayer can arrange for a third party to purchase the note from the qualified intermediary for the note’s face value so that the qualified intermediary has sufficient cash in the exchange account to pay over to the seller of the Replacement Property and transfer all of the taxpayer’s equity into the Replacement Property.

It should be noted that this strategy will not work the same way with a contract for deed, executory land contract, or installment land contract because if the taxpayer/seller is listed in the contract as the vendor, then the seller may be deemed to be in privity of contract with the buyer and to have actually received non-cash proceeds (boot) from the buyer by virtue of the rights and benefits accorded the vendor under the contract. It may be necessary in the case of a land contract to have the taxpayer/seller deed the Relinquished Property to the qualified intermediary (or a wholly owned special purpose entity of the QI) so that the seller is fully insulated from receiving any proceeds and the qualified intermediary is formally listed as the vendor under the land contract.

Post relinquished property closing, the qualified intermediary may sell off the vendor’s interest to get all cash into the exchange account, that way the qualified intermediary can contribute the cash exchange funds for the purchase of the new replacement property.

How a Qualified Intermediary Can Facilitate Your 1031 Exchange

Learn more about how a qualified intermediary can facilitate your 1031 exchange of investment real estate by contacting CPEC1031, LLC. Our team has over two decades of experience helping taxpayers of large and small defer capital gains taxes on the sale of qualifying real estate. A 1031 exchange can help you save a lot of money in deferred taxes when selling real property. Let us handle the details of your like-kind exchange and ensure you defer 100% of your gain. Reach out to set up a time to chat at our downtown Minneapolis offices today!

• 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

Why You Should Start Your Like-Kind Exchange As Early As Possible

In a 1031 exchange, timing is everything. With hard deadlines, proper planning becomes absolutely essential. In this article, we are going to talk about why you should start your like-kind exchange of real estate as early as you possibly can.

A Little Planning Goes a Long Way

In the realm of 1031 exchanges, preparation is key and a little planning goes a long way. That’s because section 1031 is governed by strict timing deadlines that you have to abide by to ensure the success of your exchange. Once you begin your exchange, you have just 180 days to finish things up. During the first 45 days of that period, you also need to do a written identification of your replacement property. We work with a lot of clients who sell their property first and then decide to do a 1031 exchange. While that’s by no means impossible, it just makes things much easier for everyone involved if you start the planning process before your 1031 exchange clock starts ticking.

Start Your Exchange Today

Take your exchange to the next level by contacting the qualified intermediaries at CPEC1031, LLC. Our like-kind exchange intermediaries have vast knowledge of the rules and regulations that govern 1031 exchanges. We can put that knowledge to work for you by facilitating your next 1031 exchange. Reach out to our 1031 exchange team today at our Minneapolis office to learn more about the numerous benefits of section 1031 and see how you can get your next like-kind exchange up and running.

• 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 Set Your Property Up for a Successful 1031 Exchange

Before diving into a 1031 exchange, it’s important to make sure your relinquished property is set up for success. In this article, we are going to offer some tips for setting your property up for a successful 1031 exchange.

Make Sure Your Property is Held for Investment or Business Use

Any property involved in a 1031 exchange must be held for use in your trade or business, or for investment purposes. To set yourself up for success, it’s important to make sure your real property ticks this essential box before embarking on a 1031 exchange. If your property is currently held for personal use and you want to exchange it, you may be able to do so if you convert it into an investment property and maintain it that way for a period of time before conducting your exchange.

Vacation Homes Can Be Tricky

When it comes to vacation homes, things can get a little tricky. While it is possible to do a 1031 exchange involving a vacation home, there are more steps you need to take to prove that the property is held primarily for investment purposes, and not for your own personal use. A qualified intermediary can explain these intricacies and help set your property up for a successful 1031 exchange.

Defer Taxes with Section 1031

You may have heard about the tax-saving benefits of section 1031 of the IRC and wondered whether or not you might qualify. The good news is that any United States taxpayer can utilize section 1031 to defer capital gains taxes when selling qualifying real estate. It doesn’t matter if you’re an industry veteran or just dipping your toe into the realm of investment real estate – 1031 exchanges can be used by anyone! Contact the qualified intermediaries at CPEC1031, LLC today to learn more about the like-kind exchange process and see if your property is eligible 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

Is a 1031 Exchange The Right Move for Me?

Many taxpayers considering a 1031 exchange ask themselves: “is a 1031 exchange the right move for me?” In this article, we are going to talk about a few ways in which you can answer that question for yourself and determine when a like-kind exchange is the right move for you.

Does Your Property Qualify for 1031 Exchange?

The first question you need to ask yourself is whether your property even qualifies for 1031 exchange treatment. Not all property is allowed to be exchanged under section 1031 of the Internal Revenue Code. In fact, some property (such as personal property) is excluded outright from 1031 exchange treatment. In order to qualify, your property has to be held for investment or business purposes, rather than personal use.

Do You Want to Continue Your Investment & Defer Your Taxes?

If your property qualifies for 1031 exchange treatment, the next question you should ask yourself is whether you’d rather pay capital gains taxes on the net sales proceeds, or instead defer those taxes by continuing your investment into a bigger property. If you’d prefer to defer your capital gains taxes on the sale and keep your money working for you in a continued investment, then a 1031 exchange is right for you!

Like-Kind Exchange Services

CPEC1031, LLC provides like-kind exchange services to taxpayers looking to avail themselves of the benefits of section 1031 of the IRC. A 1031 exchange can offer massive tax benefits to taxpayers selling investment real estate. In order to effectively defer your taxes, however, you need to hit certain benchmarks. A qualified intermediary can help you identify these benchmarks and explain how they impact your property and transaction. Contact the intermediaries at CPEC1031, LLC today to learn more about the 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

How a Qualified Intermediary Can Help You Save Money When Selling Real Estate

A qualified intermediary is an integral part of any 1031 exchange, but many taxpayers don’t understand the true value of an excellent intermediary. In this article, we are going to discuss how a qualified intermediary can help you save money when selling real estate via a 1031 exchange.

Making Sure Your Property Qualifies

The first thing your qualified intermediary can do is help you figure out if your property even qualifies for 1031 exchange treatment, and if so, how to approach your 1031 exchange so you defer 100% of your capital gains tax burden.

Making Sure You Hit Your 1031 Deadlines

1031 exchanges revolve around strict deadlines that must be hit in order to execute a successful exchange. After you sell your relinquished property, you have 45 days to give written identification of your replacement properties, and only 180 days total to complete your like-kind exchange. Your qualified intermediary will make sure you are aware of these deadlines.

Making Sure You Have the Proper Paperwork

There is an assortment of paperwork involved in any 1031 exchange. Your qualified intermediary can make sure you have the property paperwork in order when it comes time to close on your properties.

Minnesota Qualified Intermediaries

Hiring a qualified intermediary is the best way to ensure your 1031 exchange is a success and that you defer 100% of your taxable gain. A good intermediary can answer all of your questions, guide you through the process, and make sure you have everything you need throughout the 1031 exchange period. CPEC1031, LLC has been providing qualified intermediary services to clients throughout the United States for over two decades. Put your trust in our team to bring your 1031 exchange across the finish line.

• 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