Can you Buy 1031 Replacement Properties from Different Sellers?

In a 1031 exchange, you can purchase multiple replacement properties from different sellers. We see a lot of people double or tripling down with their exchanges. The real headache is that you have to properly identify all of these properties within your 45 day identification period.

We had a client that sold his optometrist practice but retained the building. When the new optometrist wanted to purchase the medical building, our client agreed to sell on the condition that he needed at least nine months lead time. He then used that lead time to find three brand new single family homes that he intended to use as rentals. When these new properties were ready to go, he then went back and finalized the sale of his old medical building in a 1031 exchange. This is a great way to make sure your 1031 exchange goes off without a hitch. Give yourself plenty of time and line up your replacement properties well in advance so you have plenty of time to get everything finished within the 180 day exchange period.

Plan Ahead to Ensure the Success of Your Like-Kind Exchange

If you want to ensure the success of your like-kind exchange, it’s a good idea to plan ahead. Consult with a qualified intermediary who can guide you through the steps of the 1031 exchange process and determine the viability of your exchange. At CPEC1031, LLC our intermediaries are skilled and experienced – with over two decades in the like-kind exchange industry. Reach out to our 1031 exchange professionals today to learn more about the details of your real estate exchange and see how you can save money by deferring capital gains taxes.

• 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

Can You 1031 Exchange From a Duplex into Raw Land?

If you own a duplex, triplex, or fourplex, can you sell that property and 1031 exchange into raw land? The short answer is, yes. In a 1031 exchange, you can buy any real estate in the United States.

That being said, you want to be careful when you’re going from improved real estate where there’s been depreciation taken on the building and going into raw land. That’s because there can be a bit of a disconnect between the depreciation you may have taken on the relinquished property (especially accelerated depreciation). It can potentially cause some unforeseen recognition of gain.

The same thing happens when you’re dealing with 1245 components (e.g. a chicken coop, silo, or grain bin) that exist on top of agricultural land. You need to match those 1245 gains from the relinquished property to new 1245 property. It’s not the end of the world if you have a mismatch here but be aware that it may cause a little bit of tax inefficiency.

In situations like this, it’s important to involve the taxpayer’s accountant. The accountant can review the depreciation schedules they’ve used in the past to determine the adjusted basis and the source of that depreciation. If you have a lot of 1245 depreciation you need to be mindful that you need to buy replacement property that’s rich with 1245 components.

Find a Qualified Intermediary for Your 1031 Exchange

Find a qualified intermediary for your next 1031 exchange by contacting CPEC1031, LLC. Our team is here to assist you throughout the entire 1031 exchange process – from the sale of your relinquished property to the purchase of your replacement property. We have decades of experience facilitating like-kind exchanges of investment or business real estate. Let us help you save money in capital gains taxes with section 1031 of the Internal Revenue Code. Find us at our Minneapolis offices today where you can learn more about the process, 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

RSVP Now - Basic Nuts & Bolts of I.R.C. Section 1031

Join us for the Basic Nuts and Bolts of I.R.C. Section 1031 event on June 12, 2024!

Learn all about the ins and outs of I.R.C. Section 1031 in this informative session. Whether you're a seasoned investor or just starting out, this event is perfect for anyone looking to expand their knowledge on tax-deferred exchanges.

Don't miss out on this opportunity to network with other like-minded individuals and gain valuable insights from industry experts. Learn all the essential details about I.R.C. Section 1031 in a fun and interactive workshop!

• When: Registration starts at 9:00 AM, class starts at 9:30 AM and runs to 11:30 AM.

• Where: The event will be held in person at 424 N Riverfront Drive, 2nd Floor, Mankato.

Seating is limited. Be sure to sign up in advance.

Two hours of standard real estate continuing education credits have been applied for from the Minnesota Commerce Department for this course.

Click on the link below to reserve your spot!

• 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

Why It’s Important to Work with an Experienced Qualified Intermediary

Unfortunately, the qualified intermediary industry is completely unregulated. Anyone can hold out their hat and proclaim themselves a qualified intermediary. That leads to a lot of slipshod work being done by people who don’t understand the forms that they’re filling out. Many inexperienced intermediaries also encourage taxpayers to engage in 1031 exchange practices that just don’t work.

For these reasons and more, it’s important to know who you’re dealing with and only work with a seasoned qualified intermediary with a successful track record. Make sure you work with a qualified intermediary with a proven track record of success and many years of experience facilitating 1031 exchange just like yours.

Consider a 1031 Exchange

If you own investment or business real estate and are thinking about selling in the near future, consider a 1031 exchange. With a like-kind exchange you can defer your capital gains tax burden when selling real estate that qualifies under section 1031 of the IRC. In order to qualify, your property needs to be held primarily for use in your trade or business or for investment purposes. If you want to learn more about the tax-saving benefits offered by section 1031, contact the qualified intermediaries at CPEC1031, LLC today. Our team has decades of experience and can help you through 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved

Do Vacation Homes or Second Homes Qualify for 1031 Exchange?

The 1031 provision of the Internal Revenue Code is for real property held for investment or for use in your trade or business. That goes for both the relinquished property and the replacement property. 

Let’s say that you sold a duplex in Uptown Minneapolis and made a lot of money on it. You take your money down to Tennessee and buy an AirBnB intermittent rental property. You may be inclined to go down and utilize that new rental property for yourself from time to time. There has been a lot of litigation between the IRS and taxpayers about this issue.

In a case called Moore v. Commissioner, the IRS really took a taxpayer to task because the taxpayer sold a lake cabin that had never been used for investment or business and he purchased another such lake cabin as his replacement property. The IRS more or less made an example out of this taxpayer. After that, the IRS created a safe harbor that outlined their thoughts on investment or business property. Under this safe harbor, any intermittent rental property used in a 1031 exchange must be rented out at least 14 days in each of the two 12 month periods after you purchase the property. In addition to that, your personal use of that rental property cannot exceed either 14 days in each of the two 12 month periods, or not more than 10% of the time the unit was rented in each of the two 12 month periods.

Let’s say that property in Tennessee was rented out for 300 days in a particular year. You could then use the property for personal use for 29 days that year because it’s less than 10% of the time it was actually rented. So you’re kind of on 1031 probation for two 12 month periods if you do a 1031 exchange involving intermittent rental property.

Exchange Your Investment Property & Defer Your Capital Gains Taxes

Utilize section 1031 to defer your capital gains taxes and build your wealth in a continuing investment property. Any US taxpayer can do a 1031 exchange on qualifying like-kind real estate. Get a jump on the 1031 process by contacting a qualified intermediary at CPEC1031, LLC. Our team can review the details of your transaction and determine whether you are a good candidate for 1031 exchange. We have over twenty years of experience in the 1031 exchange industry – facilitating exchanges in 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.

© 2024 Copyright Jeffrey R. Peterson All Rights Reserved