How Long After an Exchange can a Spouse Gift a Replacement Property to Their Spouse?

How long after an exchange can a spouse transfer a replacement property (acquired to complete a 1031 exchange) to their spouse? Ideally, you want to wait 24 months after completing the exchange. The title-holding spouse completing the 1031 exchange must “intend” to hold the replacement property for investment or business purposes rather than for a gratuitous (gifting) purposes.

26 USC 1041 - Transfers of Property Between Spouses – allows for tax-free transfers of property between married spouses, so it will not cause a gain.

The core issue is about “holding for investment and business purposes” after completing the exchange, and “continuity of investment.” Generally, a taxpayer's intent regarding the property acquired in an exchange has to be to keep the property acquired, and intend to do so with an investment purpose. Regals Realty Co. v. Commissioner, 127 F.2d 931, 933-34 (2d Cir. 1942).  The safe answer is the longer it is held for the qualified use…the better. In IRS Rev. Proc.  2008-16, The Service looks at two 12-month periods to determine if a property is held for a qualified purpose.

The IRS and federal courts may examine all of the facts and circumstances surrounding the transaction to determine the taxpayer's true intent at the time of the exchange. See Reesink v. Commissioner, No. 2475-10, 2012 Tax Ct. Memo, at 1 (T.C. Apr. 23, 2012). See also Goolsby v. Comm’r, T.C. Memo 2010-64 (T.C. 2010). See also Danielson v. Comm’r of Revenue, 2013 Minn. Tax, 2013. See also Johnson v. Comm’r of Revenue, 2014 Minn. Tax, 2014.

Reach out to CPEC1031, LLC Today

Reach out to the professionals at CPEC1031, LLC today to discuss the specific details of your next like-kind exchange of real estate. Our team of qualified intermediaries can guide you through the entire process of your 1031 exchange, from the sale of your relinquished property to the acquisition of your replacement property. We have over two decades of experience working with owners of investment real estate who want to defer their capital gains taxes and keep their money working for them. Contact us today to learn more!

• 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video - Potential Issues When Selling Multiple Relinquished Properties in a 1031 Exchange

Can you combine the proceeds from multiple relinquished properties and purchase one bigger, better property in a 1031 exchange?

The answer, of course, is yes – you can sell multiple relinquished properties. However, this opens up a can of worms of potential issues:

• Logistical issues. You need to be able to sell two properties and dispose of them within the 180 day exchange period that commences from the date of the first sale. Further, you must properly identify a big enough replacement property within the 45 day period that commences upon the sale of the first relinquished property.

• Same taxpayer requirement issues. What if the two relinquished properties are not identically owned? If there’s a discrepancy you may be able to purchase the replacement property as tenants in common to avoid potential issues.

• Accounting issues. You need to make sure that your new replacement property is big enough and that the proportionate interests are allotted enough ownership so that there’s a continuation into property of equivalent or greater value and equity. Any debts that are disposed of on the old properties also need to be adequately offset. Think about it this way: both sales have separate accounting 1031 requirements. You need to test each of those sales to make sure that you’re covering the value, equity, and debt components.

Like-Kind Exchange Company

If you’re searching for a like-kind exchange company to help with your next 1031 exchange – you’ve come to the right place. CPEC1031, LLC is a like-kind exchange company focused solely on facilitating exchanges under section 1031 of the Internal Revenue Code. We have more than two decades of experience working through exchanges of all types (forward, reverse, build-to-suit, etc.) Reach out to our 1031 exchange intermediaries today to learn more about the like-kind exchange process and see how we can help you defer your capital gains tax burden 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

RSVP For Our Upcoming 1031 Exchange Workshop

BASIC NUTS AND BOLTS OF I.R.C. SECTION 1031

Come learn all about the basics of I.R.C. Section 1031 in a fun and interactive workshop!

Join us for an informative event where we dive into the basics of I.R.C. Section 1031. Learn all about the ins and outs of like-kind exchanges and how they can benefit your investments. Whether you're a seasoned investor or just starting out, this event is perfect for anyone looking to expand their knowledge in this area.

• When: Thursday, April 24, 2025, 9:30AM - 11:30AM (9:00 AM - Check in & Networking)

• Where: 12 Elton Hills Dr NW, Rochester, MN 55901-3538

Earn 2 Hours of Continuing Education (CE) Credit: Approved by the Minnesota Department of Commerce – Standard Real Estate Credits

Don't miss out on this opportunity to gain valuable insights and network with other professionals in the field!

Seating is limited. Be sure to reserve your spot by RSVPing via the link below:

1031 Exchange Resources

The qualified intermediaries at CPEC1031, LLC are your go-to resource for all things related to like-kind exchanges of investment real property. With over twenty years of experience, our team is here to help you through all the steps of your next 1031 exchange. Let us help you defer capital gains taxes on the sale of real estate through section 1031 of the Internal Revenue Code. Our team has helped countless taxpayers successfully execute 1031 exchanges and we can help you! Reach out to us today to set up a time to chat with a qualified intermediary near you!

• 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Reasons to Seriously Consider a 1031 Exchange in 2025

There are many excellent reasons to conduct a 1031 exchange of investment real estate, but many taxpayers are unaware of these benefits. In this article, we are going to outline a couple reasons to consider a 1031 exchange in the year 2025.

Defer Your Capital Gains Tax Burden

The biggest benefit of a 1031 exchange is capital gains tax deferral. When you sell a piece of investment real estate in a straight forward sale, you are likely going to be hit with a huge capital gains tax bill. In fact, this is something that prevents many taxpayers from selling their property at all. Section 1031 offers the excellent incentive of tax deferral when you reinvest the net proceeds into a replacement property.

Move to a Different Location

1031 exchange can be conducted between properties in any location within the bounds of the United States. You can exchange out of a property in Minnesota and into a property in Arizona, so long as you meet all the requirements of section 1031. This is a great way to set yourself up for a move to a different location, while deferring a large capital gains tax bill.

Minnesota-Based Qualified Intermediaries

At CPEC1031, LLC, our Minnesota-based qualified intermediaries are here to help you defer capital gains taxes using section 1031 of the Internal Revenue Code. This powerful tax provision can help you keep your hard-earned money working for you in a continuation of investment. The best part is that any US taxpayer can utilize section 1031 for tax deferral. Contact our 1031 professionals today at our downtown Minneapolis offices to learn more about the process and how we can help you save money on your next sale of 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video – Alternative Products You can 1031 Exchange Into

Many people ask about the variety of different replacement property options that are available in a 1031 exchange and what exactly constitutes “like-kind” in the realm of real estate.

If you’re exchanging a duplex can you exchange into something completely different such as an oil and gas program? In fact there are 1031 compliant oil and gas programs that you can exchange into. There are also tenant-in-common arrangements that you can exchange into, as well as Delaware Statutory Trusts (DSTs), some of which convert into a 721 contribution of the underlying real estate into an UPREIT. So there’s a great variety of different products that you can 1031 exchange into.

One of the common themes with all of these options is that they are passive investments that allow you to work smarter, not harder.

1031 Exchange Services

A 1031 exchange is a powerful vehicle for tax-savings for owners of investment real estate. Under section 1031 of the Internal Revenue Code, you are allowed to defer capital gains taxes on the sale of qualifying real property when you reinvest your net proceeds into like-kind replacement property. Once you begin the process you must complete everything within 180 days so it’s important to adequately prepare. The best way to set yourself up for success is to coordinate with an experienced 1031 intermediary at CPEC1031, LLC.

• 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved