Can You Pocket Cash at Any Point During a 1031 Exchange?

Many taxpayers ask if they can take out any cash during the 1031 exchange process. In this article, we are going to talk about whether or not you can pocket cash at any point during a 1031 exchange.

Taxable Boot

If you pocket any cash at closing or during any point during your 1031 exchange, that would be considered taxable “boot.” You can do it if you wish, but you would have to pay capital gains taxes on that cash boot. Keep your hands off the net proceeds throughout the process to defer 100% of your gains.

Partial Exchange

In most situations, the goal of a 1031 exchange is 100% tax deferral. However, there are some instances in which a partial exchange might be acceptable or even preferable. For example, if you have prior loss carryovers, you may be able to offset a partial recognition of gains from taking some cash as taxable boot or from buying down in value on the replacement property purchase.

Find a 1031 Exchange Professional

Find a 1031 exchange professional near you and get your like-kind exchange off the ground today. At CPEC1031, LLC we have over two decades of experience facilitating 1031 exchanges of all shapes and sizes for clients in Minnesota and across the country. Our qualified intermediaries are here to help you through the entire exchange process, from start to finish. We can answer all your questions, help you find suitable replacement property, and make sure you are meeting all the requirements set out by section 1031 of the IRC. 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

3 Key Benefits of a 1031 Exchange

Taxpayers conduct like-kind exchanges for various reasons, depending on their specific situations. Indeed, there are many benefits provided by section 1031 of the Internal Revenue Code, but many people are unaware of these benefits. In this article, we discuss three key benefits of doing a 1031 exchange of real estate.

Tax Deferral

A 1031 exchange allows you to keep your money working for you in a continuation of your investment. If you dispose of a property in a traditional, straight-forward sale, you will need to recognize and pay capital gains taxes on the net proceeds from that sale. A 1031 exchange offers you a tax-advantageous alternative in which you can defer those gains by reinvesting your proceeds into a replacement property of equal or greater value.

Growth

By leveraging the proceeds from your relinquished property sale, you can accelerate the growth of your wealth. By doing so, a 1031 exchange can help compound your wealth over time as you (potentially) continue to exchange into bigger and better properties.

Flexibility

1031 exchanges give you the flexibility to upgrade, diversify, or reposition your assets. You can exchange into and out of different geographic regions and industries. For example, you can sell a retail space in Edina, Minnesota and exchange into an apartment complex in Houston, Texas.

Tax-Deferred Exchange Company

CPEC1031, LLC helps taxpayers with tax-deferred exchanges under section 1031 of the Internal Revenue Code. We have been helping people with their 1031 exchanges for over twenty years and we can help you too! Contact us today to learn more about the like-kind exchange process and 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video – Section 1033 Timelines

Section 1033 is very similar to section 1031 of the Internal Revenue Code. However, section 1033 provides for an exchange period that’s completely different than that of section 1031. Under 1033 you can suffer a loss (such as from theft, storm destruction, or from government seizure or condemnation). What is the replacement period in the context of a 1033? The date of your loss (under destruction or theft) would start the period under that scenario. But in the context of seizure, the process can actually start when there’s the first eminent threat.

So your replacement period can actually commence even before you’ve received any consideration. It can begin when the threat of seizure occurs.

What about the end of the period? The 1033 period typically ends two years after the close of the year in which you received the first payment from which you realized income. That being said, in the case of real estate that is held for investment or business purposes, your period can be extended to three years. 

Like-Kind Exchange Company – CPEC1031, LLC

CPEC1031, LLC is a like-kind exchange company working to facilitate 1031 exchanges and 1033 exchanges in Minnesota and across the country. With over two decades of experience, we are well-suited to help you through the process of deferring taxes through a 1031 exchange of real estate. We can help prepare documentation, safeguard your funds, and answer all of your questions about the process. We’ve helped countless taxpayers with their 1031 exchanges. Let us help you too. Contact us today at our Minneapolis office and get started 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video – How to Manage Your 45-Day Deadline in a 1031 Exchange

When you’re up against the gun at the end of your 1031 exchange identification period and you’re not finding any suitable replacement property, what are some alternatives to consider?

DST products (offered by wealth managers) are one of the better alternatives to consider in this situation. DSTs are pre-packaged securities. They don’t require a survey, a lease examination, or need to clear any other hurdles because the properties are already vetted.

Another solution would be to work with a commercial real estate agent who can show you triple net leased single-tenant properties.

Find a Qualified Intermediary for Your Next 1031 Exchange

Find a qualified intermediary for your next 1031 exchange at CPEC1031, LLC. With decades of experience, we have the skills and resources necessary to guide you through the like-kind exchange process from beginning to end. Our intermediaries work tirelessly to ensure you are fully educated about the process and that you don’t miss any of your 1031 exchange deadlines. Reach out to us today to learn more about how we can help and how a 1031 exchange can help you keep your money working for you in a continued investment.

• 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

How to Find a Qualified Intermediary for Your 1031 Exchange

Many taxpayers want to get into the 1031 exchange game, but don’t know where to find a qualified intermediary to facilitate their transaction. In this article, we are going to offer up a few tips for finding a qualified intermediary for your 1031 exchange.

Ask Your Network

When you’re looking for a referral for anything, one of the best places to start is your existing network. Reach out to your real estate broker, your financial planner, your accountant, or your attorney and see if they can recommend an intermediary for your exchange. These professionals likely interface with qualified intermediaries during the course of their business and they can likely connect you with a trusted intermediary.

Do Some Research

You should also do your own research, even if you’ve been given a referral. Start with a Google search and find an intermediary with great reviews. Check out their web presence and see if they are a well regarded in the industry.

1031 Exchange Company – CPEC1031, LLC

CPEC1031, LLC is your go-to 1031 exchange company, ready to help answer all of your 1031 exchange related questions. We have more than two decades of experience in the like-kind exchange industry and are well-suited to guide you through the 1031 exchange process and help you avoid any potential pitfalls. We are here to help you defer capital gains taxes when you sell qualifying real estate. Contact us today at our downtown Minneapolis office to learn more about our 1031 exchange services and see how we can help you through the specifics of your next real estate 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved