What are the Benefits of 1031 Exchanges other than Tax Deferral?

When it comes to 1031 exchanges of real estate, most people are aware of the tax deferral benefits offered by section 1031. But there are a number of other potential benefits of doing a 1031 exchange that many people are unaware of. In this article, we are going to take a look at some of the benefits of 1031 exchange apart from tax deferral.

Greater Income Potential

Exchangors can sell any appreciated real property and acquire income-producing property with better cash flow and potential appreciation.

Change Property Types

With a 1031 exchange, taxpayers can exchange into different types of investment real estate. For example, taxpayers can exchange from residential to commercial property.

Relocate

Exchange your current property and relocate to a state with greater potential growth or lower tax rates.

Consolidate

Taxpayers who own multiple properties can consolidate by exchanging them into a single property.

Get out of Management Intensive Property

1031 exchanges allow you to exchange out of property that requires a lot of deferred maintenance and into new property that is less management intensive.

Lever Up

Lever up with a 1031 exchange by selling smaller property and stretching your equity out into larger property with greater potential appreciation.

CPEC1031

At CPEC1031, LLC, we are here to help you with your 1031 exchanges of real estate. We have been facilitating exchanges for taxpayers across the United States for over twenty years. Contact us today to discuss the details of your next 1031 exchange of real estate and start realizing the tax-saving benefits of section 1031. You can find us at our primary offices in downtown Minneapolis.

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved.

How 1031 Exchanges Can Help Build & Benefit Communities

Many people are critical of section 1031 and argue that it is essential a mechanism for dodging taxes. However, section 1031 is not a tax-dodging tool (it only defers taxes that must be paid at a later date). In fact, section 1031 is extremely beneficial for building communities. In this article, we are going to discuss how 1031 exchanges of real estate can help build and benefit communities.

1031 Exchange Benefits for Communities

There are many ways that 1031 exchanges help build and benefit communities. Here are a few:

• They allow capital to flow more efficiently into different segments of the market.

• They encourage savings and investment in the US economy.

• They stimulate the economy and help create jobs.

The Other Side of the Argument

Opponents of section 1031 argue that 1031 exchanges allow investors to avoid paying capital gains taxes that would otherwise go to the federal government. This is true, but also a bit short-sighted. If 1031 exchanges were abolished tomorrow, investors would be forced to pay capital gains taxes on their real estate sales. However, this would also discourage investors from selling in the first place. 1031 exchanges are beneficial in the long-run because the encourage investors to keep reinvesting their capital into new property – thus benefiting their communities.

Get Help with Your 1031 Exchange

If you are looking for help with your 1031 real estate exchange, you’ve come to the right place! The qualified intermediaries at CPEC1031 have over two decades of experience helping clients through the ins and outs of the like-kind exchange process. We have the knowledge and the expertise needed to ensure the success of your transaction. Contact us today at our downtown Minneapolis office to learn more. We work with clients in 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

How to Reap the Benefits of a 1031 Exchange

There are many benefits to doing a 1031 exchange of real estate. In this article, we are going to talk about how you can reap the most benefits from your 1031 exchange of real estate.

The True Benefit of 1031 Exchanges

The true benefit of a 1031 exchange is that it allows the taxpayer conducting the exchange to defer their capital gains taxes when selling real estate. These taxes that would have gone to the government in an outright sale, can then be reinvested in a replacement property – which keeps your hard earned money working for you in a continued investment.

Keep Reaping

Once you have completed your 1031 exchange and successfully deferred your taxes by reinvesting your net proceeds into replacement property, there’s no reason to stop! You can keep reaping the benefits of section 1031 for the rest of your life by continuing to exchange your property rather than selling it in an outright transaction. This way you can keep deferring your taxes indefinitely – reaping the benefits offered by section 1031 until you die.

1031 Exchange Transactions

With two decades of experience working on 1031 exchange transactions, the team at CPEC1031 has all the necessary skills to ensure your exchange is successful. We can prepare all of your 1031 documents, answer all of your questions, and advise you on important decisions. Contact our team of intermediaries today at our office in downtown Minneapolis. We serve the state of Minnesota, as well as the rest of the United States so give us a call no matter where your property is located!

•  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

Pros & Cons of a 1031 Exchange

1031 exchanges offer a great vehicle for deferring capital gains taxes – but they’re not for everyone. Just like any other real estate decision, you should carefully weigh the pros and cons to see if a 1031 exchange is the right option for you. In this article, we are going to lay out some of the pros and cons of a 1031 exchange of real estate.

Pro: Tax Deferral

The number one benefit of a 1031 exchange is that it allows you to defer your capital gains taxes when you sell real estate.

Con: You Don’t Get to Keep Your Proceeds

In any 1031 exchange, you need to move your net proceeds into a new (bigger and better) replacement property. That means you do not get to pocket any of the proceeds from the sale. This may be an issue for taxpayers who are in need of liquid assets.

Pro: Greater Investment in the Long-run

Even though you aren’t able to pocket your sales proceeds, the amount of money you save in tax deferral, as well as the money that will compound in your continued investment make for a greater investment in the long-run.

Real Estate Like-Kind Exchanges

At CPEC1031 we work with clients all over the state of Minnesota, as well as across the country, on their 1031 exchanges of real estate. Our qualified intermediaries have twenty years of experience and can help you with your 1031 exchange documents and answer all of your questions. Reach out to us today if you want to learn more about the benefits of the 1031 exchange, or to start your real property exchange. Our main office is in downtown Minneapolis.

• 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

When NOT to Do a 1031 Exchange

We talk a lot about the tax-saving benefits of 1031 exchanges. But the reality is that 1031 exchanges are not right for every single situation. In some instances it just doesn't make sense to pay the associated 1031 exchange fees. The proceeds from your relinquished property generally need to hit a certain threshold to warrant the 1031 exchange fees.  

When NOT to Do a 1031 Exchange

If your state and federal tax liability (including deprecation recapture) on the sale are lower than $1,100, then you would not want to do a 1031.

Also if you sold the property and had a loss, rather than a gain, then you would not want to do a 1031 exchange.

Check with Your CPA

Best to check with your CPA before you set up the 1031 exchange to make sure you have enough profits to justify the costs involved. In most cases, the taxes far exceed the exchange fees; but you should have a clear dashboard from your CPA to know you are making the correct decision.

• 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