4 Potential Pitfalls To A Successful 1031 Exchange

1031 exchanges can be complex, and one small oversight or misstep along the way can prove extremely costly, so it’s important that you recognize some of the common pitfalls and take steps to avoid them. However, many taxpayers aren’t fully aware of some of the most common roadblocks to a proper 1031 exchange, so it’s tough to avoid a problem that you don’t see coming. In today’s blog, we spotlight four potential roadblocks to a successful 1031 exchange so that you can keep your exchange on track.

Common Roadblocks To A Successful 1031 Exchange

Here are some of the more common issues that inexperienced taxpayers can run into during their 1031 exchange.

  1. Exchanging Disqualified Properties - Not every property qualifies for a 1031 exchange. The properties must be like-kind and meet other eligibility requirements, like being property that is used for business, trade or investment purposes.

  2. Exchanging Lower Value Properties - It is in your best interest to exchange equal or higher value properties and to replace any debt from the Relinquished Property with either new debt or cash in order to avoid a taxable event during the 1031 exchange.

  3. Not Hiring A Qualified Intermediary - Not only is the process much easier if you move forward with a qualified intermediary, but it can also help you avoid an issue. A qualified intermediary keeps everything on track and ensures everything is conducted properly.

  4. Choosing The Wrong Qualified Intermediary - It’s not enough to hire any qualified intermediary to handle your exchange. You need to work with a team with extensive experience and understanding of the IRC. The team at CPEC1031 has been facilitating 1031 exchanges all across the country for more than two decades, so there is hardly a situation that arises that we don’t have familiarity with. For a smooth and seamless exchange, it pays to read reviews and find a company that has helped a variety of clients manage their exchanges in the past.

For help avoiding all of these potential roadblocks, or if you are wondering if you qualify for a 1031 exchange, please reach out to the team at CPEC1031 today at (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.

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Defer the tax. MAXIMIZE your gain.