Seller-Back Installment Notes vs. Cash on the Spot

Many people conducting 1031 exchanges have questions about sell-back financing. It would be beneficial to consult with your CPA to explore the possibility of participating in a 1031 exchange involving seller-back financing.

When a property is sold using the installment method, the seller typically needs to report all recapture income in the year of the sale, up to the total gain realized. This information can be found on the IRS website.

In terms of a 1031 exchange, it is generally advisable to have 100% cash so that the entire amount can be reinvested into the new replacement property. Your CPA can provide more insight into the Value, Equity, and Debt requirements for a 1031 exchange.

There are three basic guidelines to determine if you will defer the recognition of all gains:

  1. Ideally, the replacement property should be of equal or higher Value (net of commissions and expenses).

  2. All Equity (net proceeds) from the relinquished property should be rolled over into the replacement property.

  3. Any relieved liabilities or Debt from the old property should be balanced out by new liabilities or additional cash invested in the replacement property.

If you do not meet these benchmarks, you may only qualify for a partial tax deferral.

1031 Exchange Best Practices

There are a variety of best practices to follow when conducting a 1031 exchange of real estate. A skilled qualified intermediary can make sure you are abiding by all of these best practices. At CPEC1031, LLC our intermediaries have decades of experience facilitating like-kind exchanges just like yours. Let our team help you through the ins and outs of the 1031 exchange process and ensure that you are able to defer 100% of your capital gains taxes when selling investment real estate. Contact us today to learn more about our wide-ranging 1031 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

 

When do I Need to Finish Construction on my 1031 Exchange Property?

Build-to-suit exchanges offer an excellent opportunity for taxpayers to improve their replacement properties before acquiring them in a 1031 exchange transaction. But there are serious time constraints on any 1031 exchange that you need to be aware of. In this article, we are going to explain when you can begin construction on your 1031 exchange property.

Time Constraints of a Build-to-Suit 1031 Exchange

A build-to-suit exchange is restricted by the same timelines as any other 1031 exchange. Specifically, you only have 180 days total to complete your entire exchange. Any construction improvements made to the property must be completed within that 180 day time period. It’s important to keep that in mind when you’re planning your exchange. You’re not going to be able to build a massive skyscraper in that timeframe, but you can make smaller improvements that will benefit your property. Make sure you get all of your contractors lined up before you begin the process so you can rest assured that the work will be completed on time.

1031 Exchange Company in Minnesota

CPEC1031, LLC is a 1031 exchange company located in Minneapolis, MN. We have been providing like-kind exchange intermediary services to clients across Minnesota and throughout the United States for over two decades. We have the skills and experience necessary to make your 1031 dream a reality. Contact us today to learn more about the tax-saving benefits of a 1031 exchange, the process of exchanging property under section 1031 of the Internal Revenue Code, and how we can help you defer your capital gains taxes when selling investment real 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

When is a 1031 Exchange the Right Move?

Like-kind exchanges under section 1031 of the Internal Revenue Code are excellent vehicles for tax-deferral, but it can sometimes be difficult to ascertain when a 1031 exchange is the right move for you. In this article, we are going to talk a little bit about how to decide when a 1031 exchange is the right move for your particular situation.

Does Your Property Fit the 1031 Definition?

Before you start thinking about specific timing, you need to figure out if your property fits the 1031 definition. Namely, your property needs to be held for investment or business purposes (not personal use).

Is it the Right Time to Start Your Exchange?

If your property qualifies for 1031 exchange, the next step is to determine whether now is the right time to start your exchange. Time is a huge element in the 1031 exchange process. Once you get your exchange started, you only have 180 days to finish. With that in mind, it’s important to take the necessary steps to prepare for your exchange. Contact your team of advisors, line up a suitable replacement property, and make sure you have all your bases covered.

Harness the Power of Section 1031

Any United States taxpayer can harness the power of section 1031 of the Internal Revenue Code to defer taxes on the sale of qualifying real estate. 1031 exchanges are available to even the smallest real estate investor. Talk with a qualified intermediary at CPEC1031, LLC today to get a handle on the like-kind exchange process and see if your property qualifies for 1031 exchange treatment. Our team of professionals has over twenty years of experience and can help guide you through the details of your unique 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

How to Secure 100% Tax Deferral in a 1031 Exchange

In a perfect 1031 exchange, you can defer 100% of your taxable gain from the sale of your relinquished property. But we don’t live in a perfect world, and not every 1031 exchange results in 100% tax deferral. In this article, we are going to explain how to secure 100% tax deferral in a 1031 exchange of real estate.

Be Mindful of Your Value, Equity & Debt

In order to defer all of your taxable gains, you need to make sure your exchange satisfies what’s known in the industry as the “napkin test.” In particular, you need to make sure your replacement property is equal to or greater than your relinquished property when it comes to value, equity, and debt. If not, you risk being unable to defer 100% of your gains.

Avoid Boot

It’s also important to avoid receiving any “boot” during the 1031 exchange process in order to defer your taxes. Receiving boot of any kind can and will trigger taxable gain. This is why it’s important not to receive any cash proceeds during the exchange process. Rather, you should work with a qualified intermediary to handle receipt of these funds on your behalf.

Get a Jump on Your 1031 Exchange

If you are thinking about doing a 1031 exchange, it’s important to start the process early to ensure you don’t miss anything. Get a jump on your 1031 exchange today by contacting the team at CPEC1031, LLC! Our qualified intermediaries are well versed in the intricacies of section 1031 of the Internal Revenue Code. We can answer any questions you have, make sure you have the appropriate documentation compiled, and guide you through the 1031 exchange process from start to finish. Reach out to our team of intermediaries today to learn more about 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

3 Signs It’s Time to Consider a 1031 Exchange

If you’re curious about 1031 exchanges, there are some signs that can help you determine whether or not to conduct one. In this article, we are going to discuss three signs it’s time to consider a 1031 exchange or real estate.

You Want to Move to a Different Geographical Area or Industry

If you want to get out of a particular geographical region, a 1031 exchange may be just the ticket! In a 1031 exchange you can exchange properties across regions and industries – so long as the properties are like-kind and held for business or investment use.

You Want to Move into a Less Management-Intensive Property

Many property owners who are getting into their retirement years want to move out of management-intensive properties and into more “hands-off” investment properties. A 1031 exchange can help you do exactly that.

You Want to Defer Your Capital Gains Taxes & Continue Your Investment

Perhaps the biggest sign of all to do a 1031 exchange is the benefit of capital gains tax deferral. When you sell a qualifying property in a 1031 exchange, you get to defer your capital gains tax burden and continue your investment in a bigger replacement property. Not only do you get to avoid a potentially huge capital gains tax hit, but you keep that money compounding into the future!

Find a Qualified Intermediary Near You

Find a qualified intermediary near you to assist with your 1031 exchange of investment real estate. CPEC1031, LLC employs qualified intermediaries that help taxpayers across the United States exchange their properties and defer their capital gains taxes in the process. We can help you better understand the intricacies of section 1031 and determine whether your property is a good fit for a like-kind exchange. Contact us at our Minneapolis office today to learn more about the process and how we can help with your next 1031 exchange of real 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

 

Defer the tax. MAXIMIZE your gain.