3 Tips for Navigating the Ins and Outs of a 1031 Exchange

There are a lot of complexities when it comes to 1031 exchanges of real estate. In this article, we are going to offer up a few tips for navigating the ins and outs of a 1031 exchange.

Tip 1 – Work with a Qualified Intermediary

The most important tip we can give you is to work with a qualified intermediary on your 1031 exchange. An intermediary is someone who knows section 1031 backwards and forwards and can help you with every aspect of your exchange. They are the most important advisor you can have by your side throughout the 1031 exchange process.

Tip 2 – Know the Rules

It’s essential to have at least a basic understanding of the rules that govern 1031 exchanges of real estate. This includes the timing rules, the qualified purpose rule, among others.

Tip 3 – Don’t Wait Until the Zero Hour

Lastly, it’s always a good idea to prepare, prepare, prepare as much as possible for your exchange. If you are thinking about doing an exchange, start looking into the details well before you intend to sell your relinquished property. This will give you and your intermediary enough time to effectively prepare everything that needs to happen to ensure a successful exchange.

1031 Exchange of Real Property

CPEC1031 prides itself on providing top-notch services to taxpayers around the country who are looking to exchange their property under section 1031. Our qualified intermediaries can help you through each and every step of your exchange. We can advise you on identifying replacement property, prepare all of your documents, and answer any questions you might have along the way. Contact us today at our Minneapolis office, or any of our satellite offices across the United States to set up a time to chat about 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

3 Potential Complications in a 1031 Exchange

Like-kind exchanges of real property can save you a lot of money in capital gains taxes…when they’re done right. But there are many ways in which 1031 exchanges can go wrong. In this article, we are going to discuss three potential complications that you might run into during a 1031 exchange of real estate.

Complication – Failing to Identify Your Replacement Property

After your sell your relinquished property, you have 45 days in which to identify in writing all the replacement properties into which you wish to exchange. If you fail to identify a property during this timeframe, you won’t be able to exchange into it. That’s why it’s best to look for appropriate replacement properties before you begin the process so you have some lined up.

Complication – Failing to Finish Your Exchange on Time

1031 exchanges play out along very strict time tables. Once you sell your relinquished property, you have only 180 days to complete your like-kind exchange. You have the first 45 days set aside to identify replacement property. If you fail to meet these deadlines, your exchange will fail and you won’t be able to defer your gains. The best way to avoid this is to plan ahead and give yourself plenty of prep time before beginning your exchange.

Complication – Failing to Go up in Value, Equity, and Debt

In a 1031 exchange, your replacement property needs to be higher in value, equity, and debt, than your relinquished property. If you fail to do this, you may only be able to partially defer your gains.

Minnesota 1031 Exchange Services

At CPEC1031, we facilitate 1031 exchanges of all shapes and sizes. Our qualified intermediaries have over two decades of experience working on real estate exchanges under section 1031 of the Internal Revenue Code. Contact our 1031 exchange professionals today to learn more about the process and get your exchange off the ground! You can find us at our primary office in downtown Minneapolis, or at one of our satellite offices located 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved