Pro Tips for 1031 Exchanging Property in Different Industries

The 1031 exchange is a powerful and versatile tool that allows a taxpayer to exchange into and out of property in different sectors of the commercial real estate market. In this article, we are going to offer up some pro tips for 1031 exchanging property in different industries.

Like-Kind Real Property

All property involved in a 1031 exchange needs to be like-kind in order to qualify for tax-deferral. The good news is that like-kind is very broadly defined when it comes to real property. As long as your real property is held for investment or business purposes, it is most likely like-kind to any other real property held for a qualifying purpose. That means you can sell a relinquished property in one sector of the marketplace, and exchange into a replacement property in a totally different sector, as long as all the other requirements are met.

A 1031 Exchange Example

Let’s explain this further by examining a hypothetical example. Imagine you own a duplex that you want to sell in a 1031 exchange. You could sell that duplex and exchange into a replacement property in the same industry (perhaps into a triplex or four-plex), or you could exchange it for property in a completely different industry (a motel for example).

Contact a Qualified Intermediary

If you’re interested in learning more about the tax-saving benefits of a 1031 exchange, contact CPEC1031, LLC today. Our qualified intermediaries have over twenty years of experience facilitating 1031 exchanges of all stripes. Our team of professionals can guide you through the process and make sure your exchange is a success. Contact us today at our downtown Minneapolis offices to learn more about the process and see if you are a good candidate for a like-kind exchange of 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

In a 1031 Exchange, Do you Need to Receive All Identified Properties?

Property identification is one of the most difficult parts of a 1031 exchange. You want to make sure you find the right property for your needs and that the properties you identify fulfill the requirements of your 1031 exchange. In this article, we are going to talk about whether or not you need to receive all of your identified properties in a 1031 exchange of real estate.

Property Identification

Identifying your replacement property is an essential step in any 1031 exchange of real property. The first 45 days of your exchange period are set aside as your identification period. This is the time in which you have to identify in writing those replacement properties into which you want to exchange. Sometimes taxpayers will identify numerous properties during their identification period to keep their options open. But do you have to ultimately exchange into all of these properties when your exchange period comes to an end?

Identification Rules

If you are identifying property using the three property rule or the 200% rule, you do not have to exchange into every single property you identify. However, if you are using the 95% rule, you do need to exchange into at least 95% of the properties you identify during your identification period.

Commercial Real Estate Exchanges

A 1031 exchange can be nerve-wracking for first-timers and veterans alike. But having a skilled 1031 professional by your side will put your nerves at ease. The qualified intermediaries at CPEC1031, LLC have over two decades of experience facilitating exchanges for taxpayers throughout the United States. Our team can help prepare your documents, advise you on replacement properties, and answer all of your questions throughout the process. Contact us today to learn more about the 1031 exchange process and get your real estate exchange in the works!

• 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

Restaurant Properties & the 1031 Exchange

When it comes to 1031 real estate exchanges, there are a lot of different types of properties that can be exchanged – from hotels to apartment buildings, to fast-food restaurants. This article is all about 1031 exchanging restaurant properties. We’ll discuss the benefits of doing a like-kind exchange on restaurant properties and how to start the process.

1031 Exchanging into a Restaurant

The restaurant business is tough, but if you do the required research and find a great location – restaurants can be a great real estate investment. 1031 exchanging into restaurant space takes that a step further – allowing you to defer your capital gains tax on the sale of your property.  

Exchanges Across Industries

1031 exchanges of real estate can be done across industry lines. That means you can sell an apartment building and exchange into a fast-food restaurant with a 1031 transaction. As long as your property is held for a qualifying purpose and your replacement property is greater than your relinquished property in terms of value, equity, and debt – then you are good to go! This offers a great opportunity to continue your investment into a bigger property and keep your money working for you over time.

Save Money with a 1031 Exchange

Start saving money today with a tax-deferred exchange of real estate! As a 1031 exchange service provider with more than twenty years of experience, our intermediaries have the tools needed to help you through every step of your 1031 exchange. From document preparation to replacement property advice, we’ve got you covered! Reach out to us today to set up a time to chat with our 1031 exchange intermediaries about the details of your 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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved