When a 1031 exchange fails, it may seem like the end of the world. But don’t give up! There are options for salvaging a 1031 exchange. A popular option for rescuing a failed 1031 exchange is the Deferred Sales Trust. In this article, we are going to talk about how a Deferred Sales Trust (or DST for short) can help you rescue a failed 1031 exchange of real estate.
Avoiding a Failed 1031 Exchange
The first thing you want to do is take all the necessary precautions to avoid a failed 1031 exchange in the first place. The best way to do that is to begin preparations for your 1031 exchange well in advance and to involve a qualified intermediary early in the process.
Most 1031 exchanges fail because the taxpayer receives taxable boot during the process, fails to complete the exchange within the 180 day deadline, or does not accurately identify their replacement property. An intermediary can help you avoid all of these costly errors.
The Deferred Sales Trust Alternative
Even if your exchange fails, you are not completely out of luck. Converting your failed 1031 exchange into a Deferred Sales Trust is a great alternative method for deferring your taxes on the sale of real estate.
Hire a Qualified Intermediary
Hiring a qualified intermediary is an essential first step in any 1031 exchange. At CPEC1031, LLC, our intermediaries have more than two decades of experience working with taxpayers conducting 1031 exchanges of real estate. We can help you prepare for your exchange by putting together the necessary documents and answering all of your questions. Contact us today to learn more about how we can help you defer taxes on the sale of your real property. Our primary office location is in downtown Minneapolis, but we work with clients throughout the state of Minnesota and across 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.
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