How to Set Your Property Up for a Successful 1031 Exchange

Before diving into a 1031 exchange, it’s important to make sure your relinquished property is set up for success. In this article, we are going to offer some tips for setting your property up for a successful 1031 exchange.

Make Sure Your Property is Held for Investment or Business Use

Any property involved in a 1031 exchange must be held for use in your trade or business, or for investment purposes. To set yourself up for success, it’s important to make sure your real property ticks this essential box before embarking on a 1031 exchange. If your property is currently held for personal use and you want to exchange it, you may be able to do so if you convert it into an investment property and maintain it that way for a period of time before conducting your exchange.

Vacation Homes Can Be Tricky

When it comes to vacation homes, things can get a little tricky. While it is possible to do a 1031 exchange involving a vacation home, there are more steps you need to take to prove that the property is held primarily for investment purposes, and not for your own personal use. A qualified intermediary can explain these intricacies and help set your property up for a successful 1031 exchange.

Defer Taxes with Section 1031

You may have heard about the tax-saving benefits of section 1031 of the IRC and wondered whether or not you might qualify. The good news is that any United States taxpayer can utilize section 1031 to defer capital gains taxes when selling qualifying real estate. It doesn’t matter if you’re an industry veteran or just dipping your toe into the realm of investment real estate – 1031 exchanges can be used by anyone! Contact the qualified intermediaries at CPEC1031, LLC today to learn more about the like-kind exchange process and see if your property is eligible for 1031 exchange treatment.

• 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

Is a 1031 Exchange The Right Move for Me?

Many taxpayers considering a 1031 exchange ask themselves: “is a 1031 exchange the right move for me?” In this article, we are going to talk about a few ways in which you can answer that question for yourself and determine when a like-kind exchange is the right move for you.

Does Your Property Qualify for 1031 Exchange?

The first question you need to ask yourself is whether your property even qualifies for 1031 exchange treatment. Not all property is allowed to be exchanged under section 1031 of the Internal Revenue Code. In fact, some property (such as personal property) is excluded outright from 1031 exchange treatment. In order to qualify, your property has to be held for investment or business purposes, rather than personal use.

Do You Want to Continue Your Investment & Defer Your Taxes?

If your property qualifies for 1031 exchange treatment, the next question you should ask yourself is whether you’d rather pay capital gains taxes on the net sales proceeds, or instead defer those taxes by continuing your investment into a bigger property. If you’d prefer to defer your capital gains taxes on the sale and keep your money working for you in a continued investment, then a 1031 exchange is right for you!

Like-Kind Exchange Services

CPEC1031, LLC provides like-kind exchange services to taxpayers looking to avail themselves of the benefits of section 1031 of the IRC. A 1031 exchange can offer massive tax benefits to taxpayers selling investment real estate. In order to effectively defer your taxes, however, you need to hit certain benchmarks. A qualified intermediary can help you identify these benchmarks and explain how they impact your property and transaction. Contact the intermediaries at CPEC1031, LLC today to learn more about the exchange process.

• 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

How a Qualified Intermediary Can Help You Save Money When Selling Real Estate

A qualified intermediary is an integral part of any 1031 exchange, but many taxpayers don’t understand the true value of an excellent intermediary. In this article, we are going to discuss how a qualified intermediary can help you save money when selling real estate via a 1031 exchange.

Making Sure Your Property Qualifies

The first thing your qualified intermediary can do is help you figure out if your property even qualifies for 1031 exchange treatment, and if so, how to approach your 1031 exchange so you defer 100% of your capital gains tax burden.

Making Sure You Hit Your 1031 Deadlines

1031 exchanges revolve around strict deadlines that must be hit in order to execute a successful exchange. After you sell your relinquished property, you have 45 days to give written identification of your replacement properties, and only 180 days total to complete your like-kind exchange. Your qualified intermediary will make sure you are aware of these deadlines.

Making Sure You Have the Proper Paperwork

There is an assortment of paperwork involved in any 1031 exchange. Your qualified intermediary can make sure you have the property paperwork in order when it comes time to close on your properties.

Minnesota Qualified Intermediaries

Hiring a qualified intermediary is the best way to ensure your 1031 exchange is a success and that you defer 100% of your taxable gain. A good intermediary can answer all of your questions, guide you through the process, and make sure you have everything you need throughout the 1031 exchange period. CPEC1031, LLC has been providing qualified intermediary services to clients throughout the United States for over two decades. Put your trust in our team to bring your 1031 exchange across the finish line.

• 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

4 Factors to Consider with 1031 Exchanges Involving TIC Agreements

In this article, we are going to discuss four factors to consider when it comes to 1031 exchange involving TIC agreements.

Right of Alienation and Control

An important factor is that each TIC may transfer or encumber their property interest without the consent of the other tenant-in-common co-owners (though this right may be modified if a lender requires the provision as a condition of making a loan).

Splitting of Incomes, Waterfalls and Preferred Returns of Income

Generally, in a tenant-in-common arrangement, profits and losses should be proportionally allocated at the property level, pro rata to each TIC owner’s fractional percentage ownership of the subject real property. Special rights to earnings for a sponsor profit sharing may be indicative of a partnership.

Rights of First Refusal

Sometimes the other tenant-in-common co-owners, sponsor, or lessee may be given an explicit contractual right of first offer or first refusal regarding any co-owner’s exercise of the right to sell, convey, or transfer the co-ownership interest in the property. However, this is a thorny situation and requires the utmost care. Also, if you want to move your TIC interest into a trust or make changes later you may need to get the consent of the other parties to the tenant-in-common agreement. See LTR 200513010

Conducting Business on the Real Property or Offering (too many) Extra Amenities

Please consider this IRC document wherein a partnership was found to exist if co-owners of an apartment building lease space and in addition provide services to the occupants either directly or through an agent. However, if tenants-in-common of farm property passive lease it to a farmer for a cash rental or a share of the crops, they do not necessarily create a partnership. See Treasury Regulation. 301.7701-3(a).

Reach Out to CPEC1031, LLC Today!

A 1031 exchange is your ticket to deferring capital gains taxes when you sell like-kind real estate. Not all real estate qualifies, however. You need to exchange real estate that’s held primarily for use in your business or for investment purposes. There are several other benchmarks you need to hit in order to satisfy the 1031 exchange requirements but that is the basic threshold for engaging in a 1031 transaction. If you have questions about the like-kind exchange process and how it can help you save money in taxes when selling qualifying real estate, don’t hesitate to reach out to CPEC1031, LLC today!

• 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

When Can You Start the 1031 Exchange Process?

Many taxpayers are eager to start their 1031 exchanges, but don’t know exactly when they can or should begin the like-kind exchange process. In this article, we are going to discuss when you can start the 1031 exchange process in earnest.

How Early Can You Start?

In general, the earlier you begin the 1031 exchange process the better. Preparation is key to a successful 1031 exchange and can help avoid a lot of headaches during the process. Quite honestly, it’s never too early to start thinking about your 1031 exchange. Some people begin their planning years before the exchange actually takes place. That’s because it can take time to line up replacement properties and get relinquished properties ready to sell.

Once you begin the exchange process by selling your relinquished property, then you’re on a very tight schedule. The 1031 exchange process only lasts 180 days (with very few exceptions) from the date you sell your relinquished property. The first 45 of those 180 days are known as your identification period, during which time you need to identify your replacement properties in writing. These deadlines come quickly so it’s always good to prepare as much as possible before beginning the process.

See If You Qualify for a 1031 Exchange

Unlock the power of section 1031 of the Internal Revenue Code by contacting a qualified intermediary to see if your property qualifies for 1031 exchange treatment. CPEC1031, LLC has skilled intermediaries standing by to answer any questions you have about the 1031 exchange process. We can guide you through every stage of your like-kind exchange and ensure you are fully prepared for anything that may arise during your exchange period. Reach out to our team today at our downtown Minneapolis office and learn more about how we can help you defer 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