How to 1031 Exchange into Numerous Replacement Properties

In a 1031 exchange, you need to go up in value, equity, and debt on your replacement property. With the amount of value that you need to match, it sometimes makes sense to exchange into more than one property.

1031 Exchange Example

For example, let’s say you are selling a condo and want to purchase 2 replacement properties, as well as a piece of land as a 3rd purchase with any leftover money from the sale. Is that allowed with a 1031 exchange?

Multiple Replacement Properties

The short answer is yes, you can purchase multiple replacement properties, as long as they are US real property and held for investment/business.

Contact a Qualified Intermediary

If you’re interested in saving money in capital gains taxes with your next sale of investment real estate, a 1031 exchange may be right for you. At CPEC1031, LLC our qualified intermediaries can help you through all the steps of a 1031 exchange. We have over twenty years of experience in the 1031 exchange industry and have the knowledge to guide you through your exchange. Contact us today at our downtown Minneapolis offices to learn more and see how we can help.

• 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

What is Qualified Purpose in a Real Estate Exchange?

In a 1031 exchange, you need to hold your like-kind property with a “qualified purpose.” But what does that mean?

Qualified Purpose

A qualified purpose means that you are holding the property either as an investment or for use in your trade or business.  This means that you cannot do a 1031 exchange on your family home because this family home is being held primarily for personal use.

To avoid making a costly mistake before you sell, you should make the proper arrangements with an experienced qualified intermediary first so that the transaction is treated as a trade or exchange (rather than a sale and repurchase) to be sure that you qualify for maximum tax savings. Often deals are done informally without much of a contract or closing; a good QI can help add-back in the structure to make the deal work.

1031 Exchange Services

At CPEC1031 LLC, we work with clients across the United States on 1031 exchanges of all types. Our team of qualified intermediaries has over twenty years of experience and can help you through the details of your like-kind exchange. Contact us today to learn more about our extensive services and see how we can help. You can find us at our primary office located 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

Be Wary of Chasing Yield in Delaware Statutory Trusts

Many investors that are looking at potential properties will investigate properties that are part of a DST (Delaware Statutory Trust) and oftentimes taxpayers get very myopic about the yield or the rate of return on the investment.

Chasing Yield

If you’re chasing yield you may do yourself a disservice because if the only thing you’re worried about is getting a 6.5% return, you may take on a property that has a much higher risk and a less certain outcome than if you would have settled for a property with a 5% return but was much more stable and solvent.

A very important aspect of choosing a replacement property is to look at the potential for underlying appreciation of the asset because at the end of this run when you are going to sell the underlying asset you want an asset that will have appreciated and not declined in value. So underlying the monthly rate of return is the more important appreciation of the asset itself.

After-Tax Cash Flow

Another consideration is to look at the after-tax cash flow from the property that would include depreciation and other deductions that pass through to you as one of the fractional owners of the underlying real estate.

Further, not all DSTs are the same when it comes to debt. Some have zero debt. Others have debt that may come due after 5 or 7 years. That maturity date on the debt can create a crisis if you have to sell the property to pay off the financing.

So there are a lot of different variables to look at when exploring what DST is the best for you. If you’re chasing yield alone, your eye may not be on the ball for these other very important facets of a DST.

Reach Out to CPEC1031, LLC to Begin Your Exchange

Are you looking to learn more about how to save money in capital gains taxes on the sale of investment real estate? If so, you’ve come to the right place! CPEC1031, LLC focuses exclusively on facilitating 1031 exchanges. Our qualified intermediaries have been helping taxpayers with their 1031 exchanges for over two decades. Contact us to learn more about our services and how we can help you begin your 1031 exchange. Our primary offices are located in downtown Minneapolis, but we work with clients 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.

© 2022 Copyright Jeffrey R. Peterson All Rights Reserved

The Strategic Tax Value of a 1031 Exchange

For people that have investment real estate that they’d like to sell, a 1031 exchange can be a very valuable tax strategy. Here’s why.

How it Works

Here’s how it works – you sell investment real property. You dispose of each of those properties as part of a 1031 exchange and line up new acquisitions – new properties that are like-kind within the 45 day or 180 day exchange period.

The idea is that every disposition of a piece of real estate is a 1031 relinquished property and that gets matched up with every acquisition of a replacement property.

The Benefits

The benefits are that you get to keep the time value of that money that would otherwise go out the door in unnecessary taxes and keep that capital working in your business so that you can expand and grow your business.

So delay the recognition of gains as much as possible by incorporating a program or plan that every disposition is a tax-deferred 1031 sale, and every acquisition is the completion of a 1031 exchange. By doing this, owners of investment real estate can maximize the tax efficiency of their operation and have more money to expand and grow their business.

1031 Exchanges in Minnesota

If you are looking to do a 1031 exchange of your property in Minnesota or another state, you’ve come to the right place. CPEC1031 LLC has two decades of experience facilitating exchanges under section 1031 across the United States. We can guide you through the process and answer all of your questions. Contact us today to learn more about our services and how we can help!

• 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

How to Reduce Your Capital Gains Tax on Investment Real Estate

Real estate is a common investment vehicle for many investors. When selling any investment property, you want to determine the most tax-advantageous way to proceed. Avoiding or reducing capital gains taxes is a big concern for many investors. In this article, we are going to offer some tips for reducing your capital gains tax burden on your investment property.

1031 Exchange

Instead of selling your investment property outright and being saddled with the associated capital gains taxes, consider a 1031 exchange. In a like-kind exchange, you can defer all of your capital gains taxes on the sale of your investment property as long as you meet certain benchmarks and follow certain rules. For example, all of your net proceeds need to be rolled into a new replacement property. This benefits the economy, and also your bottom line as it allows you to avoid a tax bill and keep your money working for you over time.

Partial Tax Deferral

If you can’t (for one reason or another) defer all of your capital gains when selling your real property, there is still hope for a partial tax deferral.

Qualified Intermediary Services

At CPEC1031, LLC we provide qualified intermediary services to clients across the country. If you’re looking to defer your capital gains taxes on the sale of a piece of real estate, a 1031 exchange is the tool for you. Working with a qualified intermediary is the best way to begin your exchange. An intermediary can prepare your required 1031 documents, and answer all of your questions along the way. Reach out to us today to learn more about the 1031 exchange process and how you can benefit.

• 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