What Happens If a 1031 Exchange Fails?

There are a few ways in which a 1031 exchange can fail. In this article, we are going to discuss what your options are when a 1031 exchange fails.

Missed Deadlines

One of the most common reasons for failure is missing a deadline. The 1031 exchange process is governed by strict deadlines that you must hit in order to complete a successful exchange. Specifically, you have 180 days from the start of your exchange to the finish of your exchange. The first 45 of those days are your replacement property identification period, during which you must give written identification of your replacement property. If you go beyond either of these deadlines, your exchange will fail and you will not be able to defer your capital gains taxes.

Receiving Taxable Boot

The other common cause of failure in a 1031 exchange is receiving cash boot during the process. A 1031 exchange is meant to be a continuation of your investment. To that end, you must redeploy all of the sales proceeds from the sale of your relinquished property into your replacement property. If you pocket any of the sales proceeds or take any cash off the table during the process, that is considered taxable boot that you will not be able to defer your capital gains taxes on.

Save Money in Capital Gains Taxes

With a 1031 exchange, you can save money in capital gains taxes when selling investment or business real estate. A like-kind exchange under section 1031 of the Internal Revenue Code can be done with any like-kind US property so long as all property involved is held for the purposes of investment or business use. A qualified intermediary, such as those at CPEC1031, can help facilitate the 1031 exchange process and ensure you are able to defer 100% of your capital gains tax burden. Contact us today to learn more about the 1031 exchange process and see what the first steps are to exchange your property!

• 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

The Importance of Having a Plan B in a 1031 Exchange

The 45-day identification window can move quickly in a 𝟭𝟬𝟯𝟭 𝗘𝘅𝗰𝗵𝗮𝗻𝗴𝗲. While direct property acquisition is often Plan A, investors may also want to consider whether a 𝗗𝗲𝗹𝗮𝘄𝗮𝗿𝗲 𝗦𝘁𝗮𝘁𝘂𝘁𝗼𝗿𝘆 𝗧𝗿𝘂𝘀𝘁, or DST, belongs in their backup plan.

Don’t let the 45-day identification deadline drive your investment decision.

Plan A – Direct Property Acquisition:

• Offers greater control

• Allows you to select your own property

• Has the potential for appreciation

Plan B – Delaware Statutory Trust (DST):

• Passive ownership

• Eligible for 1031 exchange treatment

• Potential backup option when replacement property is limited

Before Investing in a DST, ask yourself these questions:

• Who is the sponsor of the DST?

• What is the exit strategy?

• Are distributions supported by underlying property cash flow?

The best 1031 exchange starts from both a tax perspective and an investment perspective. Make sure you consider both before beginning your 1031 exchange.

See If Your Property Qualifies for 1031 Exchange Treatment

Work with a qualified intermediary you can count on throughout the 1031 exchange process by hiring CPEC1031, LLC. We facilitate 1031 exchange transactions across the Twin Cities, greater Minnesota, and throughout the United States. No matter where your property is located, we have the skills and experience needed to make sure you can defer 100% of your capital gains tax burden. Reach out to our intermediaries today to learn more about the process and see if you qualify 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

3 Common 1031 Exchange Mistakes (and How to Avoid Them)

There are numerous things that can go wrong during a 1031 exchange of investment real estate. In this article, we are going to walk through some of the most common 1031 exchange mistakes and how to avoid them.

Mistake: Missing Your 1031 Exchange Deadlines

In a 1031 exchange, there are very specific and strict time deadlines. You only have a total of 180 days from the start of your exchange to the end of your exchange. That timeframe can be shortened if your federal tax filing deadline falls within your 180 day exchange period. In this situation, your exchange needs to be completed by your tax filing date. Going beyond these deadlines is a nonstarter. Your exchange will fail if you miss these deadlines.

Mistake: Failing to Identify Your Replacement Property

You also have another deadline to keep in mind – the 45 day identification deadline. This timeline runs concurrently with your 180 day exchange timeline. During this 45 day period, you have to give written identification of the replacement properties you intend to use in your exchange. If you do not identify a property within this time period, you cannot exchange into it.

Mistake: Not Reinvesting All of Your Sales Proceeds

A 1031 exchange is meant to be a continuation of your initial investment. To that end, you need to reinvest 100 of your sales proceeds from your relinquished property into your replacement property. If you take any of these proceeds as cash, that will be considered taxable boot and you will not be able to defer 100% of the gains.

Defer 100% of Your Capital Gains Tax Burden

Let the qualified intermediaries at CPEC1031, LLC help bring your like-kind exchange of real estate across the finish line! Our team has decades of experience facilitating forward, reverse, and build-to-suit 1031 exchanges. We work with clients across the state of Minnesota and throughout the entire United States. Regardless of where your property is located, we can help you through the 1031 exchange process and do everything possible to ensure you can defer 100% of your capital gains tax burden. Learn more about our services by contacting us at our downtown Minneapolis office 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

Can You 1031 Exchange Your Primary Residence?

Many people wonder if they can do a 1031 exchange with their primary home. In this article, we are going to talk about whether or not you can conduct a 1031 exchange involving your primary residence.

1031 Exchanges Involving Primary Residences

The short answer to the question at hand is no. All property used in a 1031 exchange must be held for either investment purposes or for use in your trade or business. Your primary residence is not held for such purposes – it’s held for personal use. As a result you cannot exchange your primary residence in a 1031 transaction.

There are certain situations in which you may be able to do a 1031 exchange with a property that was formerly your primary residence. For example, if you lived in a home for several years, and then decided to rent that property out after moving to another home, you may be able to do a 1031 exchange on the property. That being said, you would likely need to continue renting that property out for a considerable amount of time (at least a couple of years) before doing the exchange. These types of exchanges can get tricky so it’s important to work with a qualified intermediary who can walk you through the process and help you make informed decisions.

Work with a Qualified Intermediary at CPEC1031, LLC

It’s important to work with a qualified intermediary in any type of 1031 exchange (forward, reverse, build-to-suit) to ensure the successful deferral of capital gains taxes. At CPEC1031, LLC our qualified intermediaries have been providing services to taxpayers conducting 1031 exchanges for decades. Let us handle all the minutiae of the 1031 exchange process so you don’t have to. Our primary offices are located in downtown Minneapolis. Reach out today to see if your property is a good candidate for 1031 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved

How to Use a 1031 Exchange to Build Long-Term Wealth

A 1031 exchange is an awesome tool for tax savings and wealth enhancement. In this article, we are going to talk about how to use a 1031 exchange to effectively build long-term wealth.

How a 1031 Exchange Works

A 1031 exchange works by allowing you to defer your capital gains tax burden when you sell a piece of qualifying real estate. What does qualifying mean in the realm of 1031? In essence, a qualifying property is one held for investment purposes or for use in your trade or business.

The Long-Term Wealth Benefits of a 1031 Exchange

The true power of section 1031 is in its ability to build wealth over the long run. 1031 exchanges do not erase your capital gains tax burden, they simply defer it. That being said, you can continue deferring your capital gains taxes with subsequent 1031 exchanges over the course of decades. This allows you to keep your money working for you in continued investments for your entire lifetime.

Let CPEC1031, LLC Facilitate Your 1031 Exchange

Contact CPEC1031, LLC today to learn more about our qualified intermediaries and see how we can help facilitate your next 1031 exchange of investment or business real estate. Our team has been operating in the 1031 exchange industry for more than two decades. We have the skills and experience necessary to manage all the minute details of the 1031 exchange process so you don’t have to. Let us guide you through the like-kind exchange process and start saving money by deferring your capital gains tax on the sale of qualifying 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.

© 2026 Copyright Jeffrey R. Peterson All Rights Reserved