When is a 1031 Exchange the Right Move?

Like-kind exchanges under section 1031 of the Internal Revenue Code are excellent vehicles for tax-deferral, but it can sometimes be difficult to ascertain when a 1031 exchange is the right move for you. In this article, we are going to talk a little bit about how to decide when a 1031 exchange is the right move for your particular situation.

Does Your Property Fit the 1031 Definition?

Before you start thinking about specific timing, you need to figure out if your property fits the 1031 definition. Namely, your property needs to be held for investment or business purposes (not personal use).

Is it the Right Time to Start Your Exchange?

If your property qualifies for 1031 exchange, the next step is to determine whether now is the right time to start your exchange. Time is a huge element in the 1031 exchange process. Once you get your exchange started, you only have 180 days to finish. With that in mind, it’s important to take the necessary steps to prepare for your exchange. Contact your team of advisors, line up a suitable replacement property, and make sure you have all your bases covered.

Harness the Power of Section 1031

Any United States taxpayer can harness the power of section 1031 of the Internal Revenue Code to defer taxes on the sale of qualifying real estate. 1031 exchanges are available to even the smallest real estate investor. Talk with a qualified intermediary at CPEC1031, LLC today to get a handle on the like-kind exchange process and see if your property qualifies for 1031 exchange treatment. Our team of professionals has over twenty years of experience and can help guide you through the details of your unique 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

How to Secure 100% Tax Deferral in a 1031 Exchange

In a perfect 1031 exchange, you can defer 100% of your taxable gain from the sale of your relinquished property. But we don’t live in a perfect world, and not every 1031 exchange results in 100% tax deferral. In this article, we are going to explain how to secure 100% tax deferral in a 1031 exchange of real estate.

Be Mindful of Your Value, Equity & Debt

In order to defer all of your taxable gains, you need to make sure your exchange satisfies what’s known in the industry as the “napkin test.” In particular, you need to make sure your replacement property is equal to or greater than your relinquished property when it comes to value, equity, and debt. If not, you risk being unable to defer 100% of your gains.

Avoid Boot

It’s also important to avoid receiving any “boot” during the 1031 exchange process in order to defer your taxes. Receiving boot of any kind can and will trigger taxable gain. This is why it’s important not to receive any cash proceeds during the exchange process. Rather, you should work with a qualified intermediary to handle receipt of these funds on your behalf.

Get a Jump on Your 1031 Exchange

If you are thinking about doing a 1031 exchange, it’s important to start the process early to ensure you don’t miss anything. Get a jump on your 1031 exchange today by contacting the team at CPEC1031, LLC! Our qualified intermediaries are well versed in the intricacies of section 1031 of the Internal Revenue Code. We can answer any questions you have, make sure you have the appropriate documentation compiled, and guide you through the 1031 exchange process from start to finish. Reach out to our team of intermediaries today to learn more about 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

3 Signs It’s Time to Consider a 1031 Exchange

If you’re curious about 1031 exchanges, there are some signs that can help you determine whether or not to conduct one. In this article, we are going to discuss three signs it’s time to consider a 1031 exchange or real estate.

You Want to Move to a Different Geographical Area or Industry

If you want to get out of a particular geographical region, a 1031 exchange may be just the ticket! In a 1031 exchange you can exchange properties across regions and industries – so long as the properties are like-kind and held for business or investment use.

You Want to Move into a Less Management-Intensive Property

Many property owners who are getting into their retirement years want to move out of management-intensive properties and into more “hands-off” investment properties. A 1031 exchange can help you do exactly that.

You Want to Defer Your Capital Gains Taxes & Continue Your Investment

Perhaps the biggest sign of all to do a 1031 exchange is the benefit of capital gains tax deferral. When you sell a qualifying property in a 1031 exchange, you get to defer your capital gains tax burden and continue your investment in a bigger replacement property. Not only do you get to avoid a potentially huge capital gains tax hit, but you keep that money compounding into the future!

Find a Qualified Intermediary Near You

Find a qualified intermediary near you to assist with your 1031 exchange of investment real estate. CPEC1031, LLC employs qualified intermediaries that help taxpayers across the United States exchange their properties and defer their capital gains taxes in the process. We can help you better understand the intricacies of section 1031 and determine whether your property is a good fit for a like-kind exchange. Contact us at our Minneapolis office today to learn more about the process and how we can help with your next 1031 exchange of real estate.

• 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

Don’t Miss an Opportunity to Defer Your Taxes When Selling Investment Real Estate

When you’re thinking about selling real estate, there are multiple options to choose from. You can sell your property in a straight-forward sale, pocket the net proceeds, and pay the required capital gains taxes on the sale. Or you can exchange your property in a 1031 transaction, reinvest your net proceeds into a new replacement property, and defer your capital gains tax burden. Section 1031 of the Internal Revenue Code offers a huge opportunity for investors large and small to defer their taxes and keep their money compounding into the future.

Are You Eligible for 1031 Exchange?

Some people may not think they are eligible to conduct a 1031 exchange. The good news is that section 1031 is available to all United States taxpayers. You just need to make sure that your property qualifies for 1031 exchange treatment. 1031 exchanges can only be done with like-kind real property. Personal property is not allowed. Additionally, the real property must be held for investment purposes or for use in your trade.

1031 Exchanges of Real Estate Have Many Benefits

There are numerous benefits to conducting a real estate 1031 exchange. The most obvious benefit is that a 1031 exchange allows you to defer your capital gains taxes on the sale of qualifying real estate so long as you move your sales proceeds into a replacement property of equal or great value, equity, and debt. There are a variety of rules and regulations that need to be followed in order to complete a successful 1031 exchange of real estate. A qualified intermediary can help you navigate the process and answer any questions you might have.

• 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 is the Distinction Between an Asset Sale & Stock Sale in Relation to a 1031 Exchange?

In a 1031 exchange, one can exchange an interest in real property held for business or investment purposes. Depending on how the sale is structured, it may be classified as an asset sale, which could qualify for tax deferral under Section 1031 of the Internal Revenue Code.

An asset sale involves disposing of various property components or assets of a business, which can be categorized as:

• Real Property Assets, such as land, buildings, and permanent fixtures eligible for tax deferral under Section 1031.

• Non-Section 1031 Chattel Property, including movable objects, equipment, intangible assets, and goodwill that do not qualify for tax deferral.

• Inventory, which refers to goods held for sale and are not eligible for tax deferral under Section 1031.

On the other hand, a stock sale is the sale of an entity, such as the owner's membership interest in an LLC, partnership interest, or shares of stock in a corporation. These interests are typically excluded from tax deferral under Section 1031, according to Treasury regulation § 1.1031(a)-3.

1031 Exchanges Made Easy

At CPEC1031, LLC we make 1031 exchanges easy by walking you through the process from start to finish. For over twenty years, our qualified intermediaries have been facilitating like-kind exchanges of real estate for clients throughout the United States. We are ready and waiting to assist you through the ins and outs of your next 1031 exchange of real estate. Contact our like-kind exchange team of professionals today to get help with your next 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