Key Considerations for 1031 Exchanges

When delving into a 1031 exchange, there are crucial factors to keep in mind to ensure a smooth transaction. Here are some key points to be vigilant about.

Exchange Fees

In a standard "forward type" exchange, expect exchange fees of approximately $950 for the relinquished property closing and $350 for the replacement property closing. These fees will be deducted from the proceeds at the time of closing, so clients won't have to pay out of pocket.

Commissions and Closing Costs

Qualified exchange expenses like broker's commissions, title insurance fees, escrow fees, appraisal fees, transfer taxes, and professional service fees can generally all be paid from the exchange proceeds without impacting the exchange's qualification.

Additional Considerations

• Selling to a related party requires careful consideration.

• Lending money to the buyer of the relinquished property can impact the exchange.

• Ensuring that the value of the replacement property equals or exceeds the amount realized from the relinquished property is crucial if you want to defer 100% of the gains.

By staying aware of these factors and working closely with a qualified intermediary, you can navigate a 1031 exchange successfully. Your feedback and questions are always welcome to ensure a seamless process.

Like-Kind Exchanges Can Save You Money in Capital Gains Taxes

The biggest benefit of conducting a like-kind exchange is that you are able to defer capital gains taxes on the sale of investment real estate. However, in order to get that tax-deferral you need to meet certain benchmarks and timelines. A qualified intermediary is your go-to resource for all things 1031 exchange. Having an intermediary on your team will help solidify the success of your 1031 exchange transaction. Contact CPEC1031, LLC today for help with your next like-kind 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

When to Consider a Build-to-Suit 1031 Exchange

There are numerous types of 1031 exchanges that you can use to defer capital gains taxes on the sale of investment real estate. For some taxpayers, it can be difficult to determine which type of exchange best suits their needs. In this article, we are going to talk about when to consider a build-to-suit 1031 exchange of real estate.

Build-to-Suit Exchanges

A build-to-suit exchange has the same ultimate outcome as any other type of exchange – capital gains tax deferral. However, this type of exchange is a bit more complicated than a typical forward exchange. With a build-to-suit exchange, you perform construction improvements on your property as part of the exchange itself. This is a great option for those who can’t find a replacement property that perfectly matches their needs.

Bear in mind that any improvements made to the property as part of the exchange need to be completed within the 180 day time frame that governs all exchanges. It’s important to bear this deadline in mind and do as much prep work as possible before starting your exchange.

Turn Your 1031 Exchange Dream into a Reality

Contact CPEC1031, LLC today to turn your 1031 exchange dream into a reality! Section 1031 of the IRC is available for all US taxpayers to use. With the power of section 1031, you can defer your capital gains tax burden when selling real estate that qualifies for 1031 exchange treatment. The qualified intermediaries at CPEC1031, LLC have over two decades of experience helping taxpayers just like you defer their capital gains taxes. Let us put our experience to work and help ensure your 1031 exchange is successful.

• 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 Take Advantage of the Tax-Saving Benefits of Section 1031

There are a wide range of benefits that come with conducting a 1031 exchange, but many people don’t know how to get the ball rolling. In this article, we are going to talk about how to take advantage of the tax-saving benefits of section 1031 of the Internal Revenue Code.

Deferring Taxes on the Sale of Qualifying Real Property

First, let’s talk about the fundamentals of section 1031. A like-kind exchange (also known as a 1031 exchange) is an alternative to an outright sale of property in which you exchange your current property for a replacement property. This allows you to defer your capital gains tax burden on the sale, but you must move all of your sales proceeds into a new replacement property rather than pocketing those funds.

This can result in potentially massive tax savings as you keep your money working for you in a continued investment.

A Qualified Intermediary Can Help

A qualified intermediary is your ticket to a successful 1031 exchange. They act as the neutral third party during the transaction and hold your funds to make sure you never receive any cash boot during the transaction. They can also answer your questions and prepare the appropriate documentation for the transaction.

Take Advantage of the Tax-Saving Benefits of a Like-Kind Exchange

If you’re selling investment real estate, take advantage of the tax-saving benefits section 1031 of the IRC and exchange your property in a 1031 exchange! There are many benefits of conducting a 1031 exchange of real estate – chief among them is capital gains tax deferral. A qualified intermediary at CPEC1031, LLC can help you make sense of the many rules and requirements of section 1031 and make sure you are set up to execute a fully deferred 1031 exchange of your 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

Seller-Back Installment Notes vs. Cash on the Spot

Many people conducting 1031 exchanges have questions about sell-back financing. It would be beneficial to consult with your CPA to explore the possibility of participating in a 1031 exchange involving seller-back financing.

When a property is sold using the installment method, the seller typically needs to report all recapture income in the year of the sale, up to the total gain realized. This information can be found on the IRS website.

In terms of a 1031 exchange, it is generally advisable to have 100% cash so that the entire amount can be reinvested into the new replacement property. Your CPA can provide more insight into the Value, Equity, and Debt requirements for a 1031 exchange.

There are three basic guidelines to determine if you will defer the recognition of all gains:

1. Ideally, the replacement property should be of equal or higher Value (net of commissions and expenses).

2. All Equity (net proceeds) from the relinquished property should be rolled over into the replacement property.

3. Any relieved liabilities or Debt from the old property should be balanced out by new liabilities or additional cash invested in the replacement property.

If you do not meet these benchmarks, you may only qualify for a partial tax deferral.

1031 Exchange Best Practices

There are a variety of best practices to follow when conducting a 1031 exchange of real estate. A skilled qualified intermediary can make sure you are abiding by all of these best practices. At CPEC1031, LLC our intermediaries have decades of experience facilitating like-kind exchanges just like yours. Let our team help you through the ins and outs of the 1031 exchange process and ensure that you are able to defer 100% of your capital gains taxes when selling investment real estate. Contact us today to learn more about our wide-ranging 1031 services.

• 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 do I Need to Finish Construction on my 1031 Exchange Property?

Build-to-suit exchanges offer an excellent opportunity for taxpayers to improve their replacement properties before acquiring them in a 1031 exchange transaction. But there are serious time constraints on any 1031 exchange that you need to be aware of. In this article, we are going to explain when you can begin construction on your 1031 exchange property.

Time Constraints of a Build-to-Suit 1031 Exchange

A build-to-suit exchange is restricted by the same timelines as any other 1031 exchange. Specifically, you only have 180 days total to complete your entire exchange. Any construction improvements made to the property must be completed within that 180 day time period. It’s important to keep that in mind when you’re planning your exchange. You’re not going to be able to build a massive skyscraper in that timeframe, but you can make smaller improvements that will benefit your property. Make sure you get all of your contractors lined up before you begin the process so you can rest assured that the work will be completed on time.

1031 Exchange Company in Minnesota

CPEC1031, LLC is a 1031 exchange company located in Minneapolis, MN. We have been providing like-kind exchange intermediary services to clients across Minnesota and throughout the United States for over two decades. We have the skills and experience necessary to make your 1031 dream a reality. Contact us today to learn more about the tax-saving benefits of a 1031 exchange, the process of exchanging property under section 1031 of the Internal Revenue Code, and how we can help you defer your capital gains taxes when selling investment 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