Video - Don’t Cash Out: A History Lesson for 1031 Exchanges

Let’s do a little 1031 exchange history lesson.

If you go back in the tax code, we had a hodgepodge of laws with very little rhyme or reason. Congress would pass a law and stick it in the book. In 1921, the first iteration of the 1031 exchange was put in the code. However, it wasn’t called a “1031 exchange” yet because the Internal Revenue Code as we know it now didn’t even exist.

That first version allowed for the deferral of tax when there was a swap (of real estate or other assets). The contemplated modality was that you trade someone your farm and the other party trades you their farm in a simple swap. The thinking was that people in that situation shouldn’t be penalized with taxes if they’re just continuing their investment in a different but equivalent property. That rationale continues to this day in the realm of 1031 exchanges – don’t cash out!

Reinvest Your Sales Proceeds and Defer Your Capital Gains Taxes in a Like-Kind Exchange

With a 1031 exchange, you can defer your capital gains taxes by reinvesting the net proceeds from the sale of investment real estate. The benefits of doing so are numerous. You get to keep your money compounding and building over time in a continued investment rather than simply paying a big tax bill. Like-kind exchanges can be conducted by any US taxpayer – provided your property meets certain benchmarks. Contact the intermediaries at CPEC1031, LLC today to get help with your next 1031 exchange 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

4 Steps to a Successful 1031 Exchange

Selling investment property? If you're hoping to defer capital gains taxes and reinvest into another property, a 1031 exchange might be your smartest move. But this powerful tax-deferral strategy comes with strict rules—and missteps can be costly.

Let’s walk through the four essential steps you’ll need to follow for a smooth, IRS-compliant 1031 exchange.

1. Add a 1031 Exchange Clause to Your Purchase Agreement

To get started on the right foot, your intent to do a 1031 Exchange needs to be documented from the beginning. Adding a 1031 exchange clause to the purchase agreement notifies the buyer and helps preserve your eligibility. It’s a small but critical step that signals your plan to defer taxes.

2. Engage Your Qualified Intermediary (QI)

Once your contract is signed, it’s time to bring in your QI. A Qualified Intermediary like CPEC1031, LLC prepares the required IRS documentation, holds your sale proceeds in escrow, and structures the exchange for compliance. Without a QI, your exchange could be invalidated—so don’t go it alone.

3. Don’t Touch the Funds

At closing, your proceeds must be wired directly into the QI’s qualified escrow account. If you receive or even temporarily access the funds, the IRS considers it a taxable event. This rule is strict—so make sure your QI is ready ahead of time to receive the funds.

4. Know and Follow Your Deadlines

There are two big deadlines to keep in mind. You only have:

• 45 days in which to identify all replacement properties

• 180 days from the sale of your original property or your federal tax filing date, whichever comes sooner to close on the new property

Miss either of those deadlines, and your exchange could be disqualified. A good QI will help you stay on track and avoid common pitfalls.

Thinking About a 1031 Exchange?

A 1031 Exchange is a strategic way to preserve equity, defer taxes, and build long-term wealth—but only if it's done right. At CPEC1031, we guide investors through the process with clarity, speed, and full IRS compliance.

Have questions or want to explore whether a 1031 exchange is right for you? Reach out to Jeff Peterson today at jeffp@cpec1031.com or call 612-643-1031.

• 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

Explaining the 1033 Replacement Period

If your property is seized, condemned, or destroyed, the IRS gives you time to reinvest and defer capital gains under section 1033 of the Internal Revenue Code. But the clock is ticking, and it’s important to understand when those time periods start and stop.

When Does the 1033 Replacement Period Begin?

Let’s start with the basics. What triggers the beginning of the 1033 replacement period?

It depends on the situation. If your property is subject to storm destruction or theft, then the replacement period would begin on the date of that event—the destruction or theft itself. But if the property is condemned or seized (or even just under threat of condemnation or seizure) the clock can start earlier. It could be:

• The date of the actual condemnation or seizure.

• The date the threat of seizure began.

• The date the property was sold under that threat.

Your replacement period begins whenever one of these occurs (whichever one comes first). 

In most situations, you will have two years to complete the 1033 transaction. However, if it’s business or investment real estate, and the conversion was due to condemnation or threat of it, you get three years instead.

Get Your Like-Kind Exchange Started Today

Get your 1031 exchange of investment real estate started today by contacting the team at CPEC1031, LLC. Our qualified intermediaries have decades of experience working on all kinds of 1031 and 1033 exchanges with clients throughout the United States. No matter where your property is located, we can help facilitate your like-kind exchange and make sure you defer 100% of your capital gains taxes on the sale. Contact our team today at our downtown Minneapolis office, where you can learn more about the benefits of 1031 exchange and see 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Do Your Relinquished & Replacement Properties Need to Be in the Same State?

Some of the most common questions people have about 1031 exchanges fall under the category of “where?” In other words, many people wonder if their 1031 exchange properties need to be located in the same geographic location (city, state, etc.) In this article, we are going to talk about whether or not your 1031 relinquished and replacement properties need to be in the same geographic area in a like-kind exchange transaction.

1031 Exchanges Are Nationwide

1031 exchanges work with like-kind property across the United States. When it comes to geography, the only thing you need to make sure of is that your properties are located in the United States. Foreign property does not qualify for 1031 treatment, but property in the US works, so long as it satisfies all the other requirements of a like-kind exchange.

Diversification Into Different Markets

Exchanging into and out of property in different cities and states is actually quite a common practice among investors. Some choose to move into different states for economic reasons (perhaps they want to move to a more tax-friendly state, or into a stronger real estate market), while others do so for more personal reasons (perhaps they’re retiring and moving to a different state).

Like-Kind Exchanges of Investment Real Estate

Find a qualified intermediary to help you through the 1031 exchange process by contacting CPEC1031, LLC. Our team is ready to help you through all the details surrounding your like-kind exchange of investment real estate. Whether you’re a seasoned investor or this is your first time dipping your toes into the 1031 exchange waters, we’re here to guide you through the process. Reach out to us today at our Minneapolis office and learn more about how you can benefit from a like-kind exchange 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 

4 Essential Steps to a Successful Like-Kind Exchange

In this article, we are going to walk through four essential steps to conducting a successful like-kind exchange of real estate.

Include a 1031 Exchange Clause in Your Purchase Agreement

When you enter into a purchase agreement for a property, it’s a great idea to include a 1031 exchange clause stating that you intend to use the property in question in a 1031 exchange.

Contact a Qualified Intermediary

Early on in the process, reach out to a qualified intermediary (like CPEC1031, LLC) who can help you navigate the process successfully.

Sell Your Property While Avoiding Boot

To officially begin the 1031 exchange process, you need to sell your relinquished property. When you do this, it’s important to remember to avoid receiving any taxable “boot.” Most often, boot comes in the form of cash. Keep your hands off your cash proceeds during the process if you want to defer all of your capital gains taxes.

Remember Your Deadlines

Don’t forget that 1031 exchanges are governed by strict deadlines. Once you sell your relinquished property, you have just 180 days to complete your like-kind exchange. The first 45 days of that 180 day period are set aside as your “identification period” – the time during which you must identify in writing your replacement properties. If you miss any of these deadlines, your exchange will fail so it’s essential to be aware of these at all times.

1031 Exchange Help For Those Who Need It

At CPEC1031, LLC we offer 1031 exchange help for those who need it. No matter what your situation – whether you’re exchanging a large commercial property, a small rental property, or something in between – we are here to help! With over two decades of experience, of qualified intermediaries have the knowledge and the expertise needed to help you defer 100% of your capital gains tax burden. Let us help you through the 1031 exchange process from start to finish. Contact us at our downtown Minneapolis offices to learn more about our team 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved