3 More DST Considerations for Financial Planners & Investors

In a recent article, we talked about three DST considerations for financial planners. Here, we’re going to outline a few more things to consider when dealing with DST wholesalers and syndicators.

Multiple Assets, Multiple States

It’s important to consider whether the DST has more than one asset and if those assets are in more than one state. When you own real estate in different states, that may require you to make a state tax filing for every state that the DST has an asset in. If there is a DST comprised of 12 different properties in 12 different states, that may require your CPA to charge you for filing a tax return in each of those 12 states.

Cash Reserves

Often, DSTs will have cash reserves set aside for operational expenses. If your 1031 exchange funds are side-tracked to fund those cash reserves rather than being redeployed into the real estate, that could trigger some gain. Taxpayers often want their exchange funds to be used exclusively to fund the purchase of the real estate (the DST) and they’ll fund out of their own pocket any amounts due for cash reserves so that their exchange funds are ear-marked specifically for the real estate purchase.

Planned Changes

Another thing to talk to your DST sponsor about is to see if there is any pre-arranged plans or designs to change the DST after you buy it. Will there be a cash-out refinance under which you could get back some of your equity? Will there be a conversion to an UPREIT before you’ve held that interest in the real estate for very long? If there are going to be any material changes like this, that’s something you want to know because that may change the defensibility of your real estate holding.

Get Your Exchange Started

If you’re ready to get your 1031 exchange started today, look no further than the team at CPEC1031, LLC! With over two decades of experience, our like-kind exchange professionals can guide you through the ins and outs of your 1031 exchange. Reach out to our qualified intermediaries today to learn more about our services and see if a 1031 exchange is right for you. Our office is located in Minneapolis, but we work with clients throughout 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Can You Use Your 1031 Exchange Funds for a Contract for Deed Down Payment?

Yes, generally you can purchase the equitable title on a contract for deed to complete your 1031 exchange and you can use the exchange funds for the initial down payment.

It may depend on if the ‘equitable title’ to the real property will be conveyed to the contract for deed vendee upon the conveyance of the contract for deed. Oftentimes equitable title is shifted to the vendee as the owner of property for federal tax purposes because the vendee has possession of the property, bears the risk of loss from damage or destruction of the property and pays the property taxes and insurance expenses (either directly or through the payments under the contract for deed).

For federal tax purposes the vendee on the contract for deed generally is deemed to be the equitable owner, and the vendor is merely holding bare legal title as an enforcement mechanism to compel payments (creditor) and full performance of the vendee. [Contracts can differ depending on terms – but this is generally the case.]

Contact CPEC1031, LLC

Looking to defer taxes on the sale of investment property? A 1031 exchange may be a good fit for you! For over two decades, the qualified intermediaries at CPEC1031, LLC have been facilitating like-kind exchanges of investment real estate. Let our 1031 exchange professionals assist you with your next real estate exchange. Contact us today at our Minneapolis offices to learn more about our exchange services and whether or not your property qualifies. We facilitate exchanges throughout the state of Minnesota and across the country.

• 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

The Qualities of a Perfect 1031 Exchange Property

When it comes to 1031 exchanges of real estate, the qualities of your property matter a great deal. In this article, we are going to talk about the qualities of a perfect 1031 Exchange property.

Property Quality Matters

The fact of the matter is that there is no perfect 1031 exchange property. Every taxpayer’s situation is different and there are many types of properties that work well in a 1031 exchange. However, just because the perfect property doesn’t exist doesn’t mean that you shouldn’t strive for perfection in your 1031 exchange.

It is essential to examine the qualities of your property when considering a 1031 exchange because not all property qualifies for like-kind exchange treatment. For example, all personal property (such as your primary residence) is barred from 1031 exchange. You need to make sure that the property you wish to exchange is, first and foremost, real estate held for a qualifying purpose. That qualifying purpose is typically defined as for use in your trade or business, or for investment. If your property has these qualities, there’s a good chance that it will qualify for a 1031 exchange.

Get Help with Your 1031 Exchange

The 1031 exchange process can be complicated. It’s important to work with a qualified intermediary who understands the ins and outs of section 1031 of the Internal Revenue Code. The qualified intermediaries at CPEC1031, LLC have been working with taxpayers on their like-kind exchanges for more than two decades. During that time, we’ve facilitated exchanges of all shapes and sizes. Let us put our extensive experience to work for you on your next 1031 exchange of real estate. Contact us today at our Minneapolis offices. We serve clients throughout Minnesota, as well as the entire 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchange Location Considerations

There are many questions surrounding the rules and regulations that govern 1031 exchanges of investment real estate. Some of the most common questions we get are about location. In this article, we are going to talk about some location considerations when it comes to 1031 exchanges of real estate.

Property Within the United States

A 1031 exchange can only be done between property located in the United States. That means both your relinquished property and your replacement property need to be US property. Foreign property does not qualify for 1031 exchange treatment. Keep in mind that your property also needs to be held for a qualified purposes (i.e. investment or business use) and not personal property.

Exchanges Between States

Another common question we get is whether or not you can exchange property between different states. In short, yes. You can exchange a relinquished property in one state for a replacement property in another state. You could sell an duplex in Minnesota and exchange into a retail space in Florida. Exchanging between different states is a very common practice. It can be especially beneficial when taxpayers wish to move their investment into a more tax-advantaged state. Whatever the reasoning, it is perfectly acceptable to 1031 exchange property from one state to another.

Minnesota Qualified Intermediary Services

At CPEC1031, LLC we provide 1031 exchange services to taxpayers looking to sell qualifying real property and defer their taxes. We have been working in the 1031 exchange industry for more than two decades. Contact our team today to learn more about our wide array of 1031 exchange services and find out how we can help you defer your capital gains taxes. Our office is located in Minneapolis. We provide 1031 exchange services to clients throughout the state of 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Should I Wait Until Next Year to do my 1031 Exchange?

Timing is essential in any 1031 exchange. Some people wonder when they should conduct their exchange. In this article, we are going to discuss whether or not you should wait until next year to conduct a 1031 exchange.

Timing Considerations

There are many timing-related considerations to keep in mind when conducting a 1031 exchange. First, it’s important to remember your 1031 exchange time limits. You only have 180 days from the start of your exchange to the finish line. The first 45 days of that time period is your identification period. You can start your 1031 exchange whenever you’d like, but bear in mind that these time deadlines are hard and fast.

Tax Reporting Considerations

There are some tax reporting considerations to weigh if you’re debating whether to do your exchange this year or to wait until the following year. When your exchange finishes will have an impact on when and how your report the exchange to the IRS. It’s important to work closely with your CPA or tax advisor on this matter to ensure everything goes smoothly.

Contact CPEC1031, LLC Today

Contact CPEC1031, LLC today to get your 1031 exchange off the ground! If you’ve got investment real estate that you’re looking to sell but want to avoid a capital gains tax burden, a like-kind exchange may be a good fit for you. The qualified intermediaries at CPEC1031, LLC have over two decades of experience facilitating 1031 exchanges of all shapes and sizes. Reach out to our team to learn more about the intricacies of section 1031 and see if your property qualifies. Our offices are located in downtown Minneapolis, but we provide exchange services to taxpayers throughout the country.

• 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved