Can Anyone Do a Reverse 1031 Exchange?

Many real estate investors are aware of reverse 1031 exchanges, but may not know if they’re eligible for one. In this article, we’re going to discuss whether anyone can do a reverse 1031 exchange and when someone might find it beneficial.

Reverse 1031 Exchanges

As with all types of 1031 exchanges, reverse exchanges under section 1031 of the Internal Revenue Code are available to any US taxpayer. As long as you own qualifying investment real estate in the United States, you can conduct a reverse like-kind exchange.

When to Consider a Reverse Exchange

Now that you know reverse exchanges are available to all US taxpayers, the next thing to think about is when to consider a reverse exchange. Reverse exchanges are a particularly helpful tool in hot real estate markets when it may be difficult to find an ideal replacement property within the 180 day like-kind exchange time period. With a reverse exchange, you can lock up your replacement property first, and then sell your relinquished property after the fact (while still completing everything within 180 days).

Does Your Property Qualify for 1031 Exchange?

If you own real estate that you’re holding for investment purposes or for use in your trade or business, then you are eligible to defer your capital gains taxes via a 1031 exchange. At CPEC1031, LLC we are your one-stop-shop for 1031 exchange resources. Our qualified intermediaries can walk you through every step of your 1031 exchange – making sure you are fully informed and prepared at all times. We’ve been helping taxpayers in the 1031 exchange industry for more than twenty years. Give us a call today to learn more about the 1031 exchange process 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

What Do Beginner’s Need to Know About the 1031 Exchange Process?

The 1031 exchange process can be overwhelming for those who have never been through it before. Arming yourself with a little bit of knowledge about the process can put your mind at ease. In this article, we are going to talk about what beginner’s need to know about the 1031 exchange process.

The Basics of Like-Kind Exchanges

First, let’s talk briefly about the basics of like-kind exchanges under section 1031 of the Internal Revenue Code. In essence, a 1031 exchange is an alternative to an outright sale of real estate, wherein you reinvest your sales proceeds into a like-kind replacement property. Doing so allows you to continue your investment and defer your capital gains taxes on the sale at the same time.

Qualifications

Before you get too excited, you need to determine whether or not your property qualifies for 1031 exchange treatment. 1031 exchanges are restricted to real estate. Personal property exchanges are not allowed.

Within the realm of real estate, there are further restrictions. The real estate used in a 1031 exchange (both the relinquished property and the replacement property) need to be like-kind and held for investment or business use. Any real estate held primarily for personal use (such as your primary home or residence) is not allowed in a 1031 exchange.

1031 Exchange May be a Good Fit for Your Property

If you own investment or business real estate, a 1031 exchange may be a good fit for your property. When you exchange your property in a 1031 transaction, you are able to defer your capital gains tax burden and put that money to use in a continued investment. A qualified intermediary who specializes in 1031 exchanges can help you through all the details of your 1031 exchange and make sure you fully understand the various rules and requirements. Contact CPEC1031, LLC today to learn more about the many benefits of the 1031 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

Where to Find a Qualified Intermediary for Your 1031 Exchange

Working with a qualified intermediary can make your 1031 exchange a walk in the park. However, many people don’t know where to find a good intermediary for their exchange. In this article, we are going to discuss where to find a qualified intermediary for your 1031 exchange.

Search Online

A good place to begin your search for a qualified intermediary is online. Look for an intermediary who has experience specifically in the 1031 exchange industry. At CPEC1031, LLC we focus solely on 1031 exchanges. A lot of other intermediaries dabble in other services and aren’t as specialized.

Geographic Considerations

One common misconception is that your qualified intermediary has to be physically located in the same area as your property. That’s not true. You can work with a qualified intermediary from Minnesota, even if your property is located in New York or California (or any other state). That being said, it’s important to make sure your intermediary is familiar with the local customs and regulations of the geographical area where your property is located.

Defer Your Capital Gains Tax Burden with a 1031 Exchange

Defer your capital gains taxes with a 1031 exchange of real estate. CPEC1031, LLC has over two decades of experience facilitating exchanges of all shapes and sizes. We can put our vast experience to work on your next exchange and make sure you defer 100% of your gains. Contact our qualified intermediaries to discuss the details of your next 1031 exchange of real estate. You can set up your appointment with one of our qualified intermediaries at our Minneapolis offices today to learn more!

• 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

1031 Exchanges with Seller-Back Financing Involving a Promissory Note

Dealing with seller-back financing involving a promissory note in a 1031 exchange can be tricky. One potential solution is to have the taxpayer/seller instruct the buyer to make the promissory note in favor of the qualified intermediary. This allows the qualified intermediary to receive all of the proceeds (including the seller-back note). Before the closing of the Replacement Property, the taxpayer can arrange for a third party to purchase the note from the qualified intermediary for the note’s face value so that the qualified intermediary has sufficient cash in the exchange account to pay over to the seller of the Replacement Property and transfer all of the taxpayer’s equity into the Replacement Property.

It should be noted that this strategy will not work the same way with a contract for deed, executory land contract, or installment land contract because if the taxpayer/seller is listed in the contract as the vendor, then the seller may be deemed to be in privity of contract with the buyer and to have actually received non-cash proceeds (boot) from the buyer by virtue of the rights and benefits accorded the vendor under the contract. It may be necessary in the case of a land contract to have the taxpayer/seller deed the Relinquished Property to the qualified intermediary (or a wholly owned special purpose entity of the QI) so that the seller is fully insulated from receiving any proceeds and the qualified intermediary is formally listed as the vendor under the land contract.

Post relinquished property closing, the qualified intermediary may sell off the vendor’s interest to get all cash into the exchange account, that way the qualified intermediary can contribute the cash exchange funds for the purchase of the new replacement property.

How a Qualified Intermediary Can Facilitate Your 1031 Exchange

Learn more about how a qualified intermediary can facilitate your 1031 exchange of investment real estate by contacting CPEC1031, LLC. Our team has over two decades of experience helping taxpayers of large and small defer capital gains taxes on the sale of qualifying real estate. A 1031 exchange can help you save a lot of money in deferred taxes when selling real property. Let us handle the details of your like-kind exchange and ensure you defer 100% of your gain. Reach out to set up a time to chat at our downtown Minneapolis offices 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

Why You Should Start Your Like-Kind Exchange As Early As Possible

In a 1031 exchange, timing is everything. With hard deadlines, proper planning becomes absolutely essential. In this article, we are going to talk about why you should start your like-kind exchange of real estate as early as you possibly can.

A Little Planning Goes a Long Way

In the realm of 1031 exchanges, preparation is key and a little planning goes a long way. That’s because section 1031 is governed by strict timing deadlines that you have to abide by to ensure the success of your exchange. Once you begin your exchange, you have just 180 days to finish things up. During the first 45 days of that period, you also need to do a written identification of your replacement property. We work with a lot of clients who sell their property first and then decide to do a 1031 exchange. While that’s by no means impossible, it just makes things much easier for everyone involved if you start the planning process before your 1031 exchange clock starts ticking.

Start Your Exchange Today

Take your exchange to the next level by contacting the qualified intermediaries at CPEC1031, LLC. Our like-kind exchange intermediaries have vast knowledge of the rules and regulations that govern 1031 exchanges. We can put that knowledge to work for you by facilitating your next 1031 exchange. Reach out to our 1031 exchange team today at our Minneapolis office to learn more about the numerous benefits of section 1031 and see how you can get your next like-kind exchange up and running.

• 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