Short-Term Intermittent Rentals will be Subject to More Tax in Minnesota

The Minnesota Department of Revenue recently announced that VRBO, AirBnB & other short-term intermittent rentals will be subject to more tax in Minnesota as they will be classified as commercial property. The department of revenue passed this earlier this year and sent a notice to all county assessors to identify these properties. Any required classification change identified by our appraisers will be effective for the 2020 assessment year and impact taxes payable in 2021.

Can short-term Rental Property be Classified as Residential?

In short, no. Short-term rental property cannot be classified as residential or apartment property because its primary function is income generation through short-term lodging (less than 30 consecutive days) - similar to a hotel property. Residential non-homestead and apartment classifications require rentals by tenants for 30 consecutive days or more.

CPEC1031

If you have any questions about how these new rules apply to your short-term rental property or whether or not you can subsequently do a 1031 exchange on such a property, contact us. For the past two decades, CPEC1031 has been helping taxpayers large and small exchange their investment property under section 1031 of the Internal Revenue Code. Our qualified intermediaries can advise you on replacement property, prepare your 1031 documents, and answer any questions you have along the way. Contact us today to learn more about the process and if your property qualifies. You can find us at our downtown Minneapolis office or at one of our satellite offices around the United States.

• 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

How Long Should You Keep Your Tax Records for 1031 Exchange Purposes?

Many taxpayers wonder how long they should hold onto their tax records. A couple years? 10 years? Forever? In this article, we’re going to talk about how long to keep your tax records, specifically when it comes to 1031 exchanges of real estate.

The Safe Answer

There really isn’t a hard and fast rule about how long you should keep your tax forms. But the safest answer to the question posed above is forever. If you always have your tax forms on hand, you’ll always have them if a need arises. With the ubiquity of cloud storage services available, keeping these files stored digitally has never been easier.

1031 Exchange Documents

Keeping your tax documents on hand is especially important when it comes to 1031 exchanges. You want to be able to prove to the IRS that your exchange is legitimate at all times. If the IRS performs an audit a decade from now and they start asking questions about an exchange you did twenty years ago, you want to be sure that you have the required documents on file to back up your exchange.

1031 Exchange Your Property!

If you’re thinking about doing a 1031 exchange on your property, you’ve come to the right place! At CPEC1031, we help taxpayers large and small with their like-kind exchanges of real estate. Our team has two decades of experience that we put to work on every exchange we facilitate. Reach out to us at our downtown Minneapolis office today to learn more about the 1031 exchange process and get started with your 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

2019 Long-Term Capital Gains Tax Rates

Capital gains taxes are top-of-mind for anyone looking to sell a piece of property. For many investors, if capital gains taxes are too high, they won’t sell their property. In this article, we are going to discuss the 2019 long-term capital gains tax rates and how a 1031 exchange can help you defer these taxes when selling property.

Capital Gains Tax Rates in 2019

The table below outlines the 2019 long-term capital gains tax brackets by income and filing status:

Consider a 1031 Exchange

A 1031 exchange can help you avoid these hefty capital gains tax burdens. By moving all of your net proceeds into a new replacement property, you can effectively defer your capital gains taxes. This has the added benefit of keeping your money working for you in a continued investment – compounding and building wealth over time.

Meet with a Qualified Intermediary

If you’re mulling over the possibility of doing a 1031 exchange on your piece of real estate, do yourself a favor and meet with a qualified intermediary to discuss your situation. At CPEC1031, our intermediaries have more than two decades of experience facilitating exchanges for taxpayers in all industries and geographic locations. Reach out to our 1031 exchange professionals today at our downtown Minneapolis office to talk about the details of your exchange and start saving money on taxes right away!

• 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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

How to Defer Taxes When Selling Real Estate

When you sell a piece of real estate, you hope to make as much profit as possible. But with the capital gains taxes assessed on the sale, you may end up owing more than anticipated. A high capital gains tax bill may even be enough to dissuade you from selling your property. A 1031 exchange can solve many of these problems for you. In this article, we are going to talk about how a 1031 exchange can help you defer capital gains taxes when selling real estate.

Using a 1031 Exchange to Defer Taxes

A 1031 exchange is a great tool you have at your disposal to defer taxes on the sale of real estate. How, you ask? Instead of selling your property outright, taking the net proceeds, and paying the required capital gains taxes, you can reinvest your net proceeds into a like-kind replacement property. This is the 1031 exchange in a nutshell. No, you don’t get to pocket the sales proceeds, but you do get to defer a potentially huge capital gains tax hit. As an added bonus, you get to keep your money working for you in a continued investment property.

Capital Gains Tax Deferral

Capital gains taxes can really add up when selling real estate. Why not defer those taxes and keep your money working for you in a continued investment? That’s what a 1031 exchange allows you to do.  Reach out to the qualified intermediaries at CPEC1031 to learn more about the benefits of a 1031 exchange and to see if your property is a good fit. Our main office is located in downtown Minneapolis, but we work with clients throughout the state of Minnesota, and around the United States.

•  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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

How to Deal with a 1031 Exchange That Spans 2 Tax Years

In this article, we are going to talk about what you should do if your 1031 exchange spans two tax years.

1031 Deadlines

In a typical 1031 exchange, you have 180 days to complete your exchange after selling your relinquished property. However, that changes if your federal tax filing deadline comes before your 180th day. The IRS requires you to report your relinquished property sale and your replacement property purchase on the same tax return. That means if your tax filing deadline falls inside of your 180 day exchange period, you have to complete your exchange by the filing deadline, rather than the 180th day. If you are doing an exchange as a business entity, things can get even more complicated, since S corps and C corps have a filing deadline of March 15.

It’s important to be aware of these deadlines so you can adjust your timing accordingly, or file for an extension if need be. A qualified intermediary can help you with all of these factors and ensure that your exchange does not fail.

Twin Cities Intermediaries

If you are thinking about doing a 1031 exchange, your first step should be to contact a qualified intermediary who specializes in exchanges of real property. A qualified intermediary can help prepare all of your documents, answer any of your questions, and advise you throughout the exchange process. At CPEC1031, our intermediaries have twenty years of experience and can help you through every step of your exchange. Contact us today to schedule a time to chat with one of our intermediaries. Our main office is located in downtown Minneapolis, but we help clients throughout the state of Minnesota and the country.

• Start Your Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved