How Long After an Exchange can a Spouse Gift a Replacement Property to Their Spouse?

How long after an exchange can a spouse transfer a replacement property (acquired to complete a 1031 exchange) to their spouse? Ideally, you want to wait 24 months after completing the exchange. The title-holding spouse completing the 1031 exchange must “intend” to hold the replacement property for investment or business purposes rather than for a gratuitous (gifting) purposes.

26 USC 1041 - Transfers of Property Between Spouses – allows for tax-free transfers of property between married spouses, so it will not cause a gain.

The core issue is about “holding for investment and business purposes” after completing the exchange, and “continuity of investment.” Generally, a taxpayer's intent regarding the property acquired in an exchange has to be to keep the property acquired, and intend to do so with an investment purpose. Regals Realty Co. v. Commissioner, 127 F.2d 931, 933-34 (2d Cir. 1942).  The safe answer is the longer it is held for the qualified use…the better. In IRS Rev. Proc.  2008-16, The Service looks at two 12-month periods to determine if a property is held for a qualified purpose.

The IRS and federal courts may examine all of the facts and circumstances surrounding the transaction to determine the taxpayer's true intent at the time of the exchange. See Reesink v. Commissioner, No. 2475-10, 2012 Tax Ct. Memo, at 1 (T.C. Apr. 23, 2012). See also Goolsby v. Comm’r, T.C. Memo 2010-64 (T.C. 2010). See also Danielson v. Comm’r of Revenue, 2013 Minn. Tax, 2013. See also Johnson v. Comm’r of Revenue, 2014 Minn. Tax, 2014.

Reach out to CPEC1031, LLC Today

Reach out to the professionals at CPEC1031, LLC today to discuss the specific details of your next like-kind exchange of real estate. Our team of qualified intermediaries can guide you through the entire process of your 1031 exchange, from the sale of your relinquished property to the acquisition of your replacement property. We have over two decades of experience working with owners of investment real estate who want to defer their capital gains taxes and keep their money working for them. Contact us today to learn more!

• 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

Video - Potential Issues When Selling Multiple Relinquished Properties in a 1031 Exchange

Can you combine the proceeds from multiple relinquished properties and purchase one bigger, better property in a 1031 exchange?

The answer, of course, is yes – you can sell multiple relinquished properties. However, this opens up a can of worms of potential issues:

• Logistical issues. You need to be able to sell two properties and dispose of them within the 180 day exchange period that commences from the date of the first sale. Further, you must properly identify a big enough replacement property within the 45 day period that commences upon the sale of the first relinquished property.

• Same taxpayer requirement issues. What if the two relinquished properties are not identically owned? If there’s a discrepancy you may be able to purchase the replacement property as tenants in common to avoid potential issues.

• Accounting issues. You need to make sure that your new replacement property is big enough and that the proportionate interests are allotted enough ownership so that there’s a continuation into property of equivalent or greater value and equity. Any debts that are disposed of on the old properties also need to be adequately offset. Think about it this way: both sales have separate accounting 1031 requirements. You need to test each of those sales to make sure that you’re covering the value, equity, and debt components.

Like-Kind Exchange Company

If you’re searching for a like-kind exchange company to help with your next 1031 exchange – you’ve come to the right place. CPEC1031, LLC is a like-kind exchange company focused solely on facilitating exchanges under section 1031 of the Internal Revenue Code. We have more than two decades of experience working through exchanges of all types (forward, reverse, build-to-suit, etc.) Reach out to our 1031 exchange intermediaries today to learn more about the like-kind exchange process and see how we can help you defer your capital gains tax burden when selling 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

Reasons to Seriously Consider a 1031 Exchange in 2025

There are many excellent reasons to conduct a 1031 exchange of investment real estate, but many taxpayers are unaware of these benefits. In this article, we are going to outline a couple reasons to consider a 1031 exchange in the year 2025.

Defer Your Capital Gains Tax Burden

The biggest benefit of a 1031 exchange is capital gains tax deferral. When you sell a piece of investment real estate in a straight forward sale, you are likely going to be hit with a huge capital gains tax bill. In fact, this is something that prevents many taxpayers from selling their property at all. Section 1031 offers the excellent incentive of tax deferral when you reinvest the net proceeds into a replacement property.

Move to a Different Location

1031 exchange can be conducted between properties in any location within the bounds of the United States. You can exchange out of a property in Minnesota and into a property in Arizona, so long as you meet all the requirements of section 1031. This is a great way to set yourself up for a move to a different location, while deferring a large capital gains tax bill.

Minnesota-Based Qualified Intermediaries

At CPEC1031, LLC, our Minnesota-based qualified intermediaries are here to help you defer capital gains taxes using section 1031 of the Internal Revenue Code. This powerful tax provision can help you keep your hard-earned money working for you in a continuation of investment. The best part is that any US taxpayer can utilize section 1031 for tax deferral. Contact our 1031 professionals today at our downtown Minneapolis offices to learn more about the process and how we can help you save money on your next sale 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

Video – Alternative Products You can 1031 Exchange Into

Many people ask about the variety of different replacement property options that are available in a 1031 exchange and what exactly constitutes “like-kind” in the realm of real estate.

If you’re exchanging a duplex can you exchange into something completely different such as an oil and gas program? In fact there are 1031 compliant oil and gas programs that you can exchange into. There are also tenant-in-common arrangements that you can exchange into, as well as Delaware Statutory Trusts (DSTs), some of which convert into a 721 contribution of the underlying real estate into an UPREIT. So there’s a great variety of different products that you can 1031 exchange into.

One of the common themes with all of these options is that they are passive investments that allow you to work smarter, not harder.

1031 Exchange Services

A 1031 exchange is a powerful vehicle for tax-savings for owners of investment real estate. Under section 1031 of the Internal Revenue Code, you are allowed to defer capital gains taxes on the sale of qualifying real property when you reinvest your net proceeds into like-kind replacement property. Once you begin the process you must complete everything within 180 days so it’s important to adequately prepare. The best way to set yourself up for success is to coordinate with an experienced 1031 intermediary at CPEC1031, LLC.

• 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

Video - 1031 Exchange Tips for Tax Season

If you recently completed a 1031 exchange and you need to report it to the IRS, you may need to assemble some information to allow your tax preparer to put together everything required to file your federal tax return.

Your tax preparer will need to fill out form 8824, which is essentially a worksheet that helps the IRS connect the dots between the properties that were sold and received during the 1031 exchange. This form requires a lot of information. Here’s some of the information you can assemble and provide to your taxpayer in advance of the tax filing deadline:

• If you used a qualified intermediary, you may have received a closeout or summary letter that provides all of the critical dates and explains how your exchange funds were utilized.

• As to the relinquished property, you can provide a pdf copy of the final signed closing statement that summarizes how the monies were spent.

• Provide the deed or conveyance document that was used to convey the ownership of the property to the purchaser.

• If you received a 1099-S, this is another great document to provide your tax preparer.

• Once you sold your relinquished property, you may have identified your replacement property within the 45 day identification period. If you did, you’ll want to provide a copy of that identification form to your tax preparer together with proof that it was timely sent to the recipient.

• When you closed on your replacement property, you probably had a closing statement showing the funds coming in, the purchase price, the closing date, and various transactional expenses. This is a great thing to provide your tax preparer as well.

• Sometimes, mistakes happen during closings and they need to be corrected. If you received a corrected document after closing, that’s important to give to your accountant so they’re working with updated information.

1031 Exchange Help

CPEC1031, LLC offers qualified intermediary services for taxpayers considering a 1031 exchange of real estate. A like-kind exchange is a great way to defer capital gains taxes on the sale of real estate by continuing your investment into a bigger replacement property. In order to defer all of your gains, you need to abide by the rules set out by section 1031 of the Internal Revenue Code. Work with a qualified intermediary on your exchange to ensure that you meet all the required benchmarks. Reach out to the intermediaries at CPEC1031, LLC today to see if a 1031 exchange is right for you!

• 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