Tips for Finding & Identifying the Perfect Replacement Property

One of the most challenging aspects of a like-kind exchange is finding the right replacement property. In this article, we will offer up some tips for finding and identifying the perfect replacement property for your 1031 exchange.

Keep a Wide View of Your Options

Don’t focus too narrowly on a specific property you want to exchange into. In a hot seller’s market, you may not be able to get the exact property you want before someone else snatches it up. The good news is that you can exchange pretty much any real estate for other real estate (provided it’s held for investment or business purposes). It doesn’t hurt to expand your scope and consider options you may not have thought of before.

Give Yourself Enough Time

1031 exchanges have to abide by strict timelines. To review: once you sell your relinquished property, you only have 180 days to acquire your replacement property and finish your exchange. The first 45 segment of those 180 days are set aside as your identification period. Start looking for replacement property before you even sell your relinquished property so you don’t back yourself into a corner that you can’t get out of.

Contact a Like-Kind Qualified Intermediary

CPEC1031 specializes in real estate exchanges under section 1031 of the Internal Revenue Code. Twenty years of experience has given us unique insight into the ins and outs of the 1031 exchange process. Reach out to a qualified intermediary at CPEC1031 today to discuss the details of your 1031 exchange. You can find us at our offices in downtown Minneapolis.

• 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

Reviewing the 3 Replacement Property Identification Rules

Identifying replacement property is one of the most challenging aspects of a 1031 exchange. Finding the right property and making sure you satisfy all the necessary requirements can be difficult and may discourage some people from engaging in like-kind exchanges. In this article, we are going to review the three replacement property identification rules when it comes to 1031 exchanges of real estate. The person conducting the exchange needs to satisfy at least one of these rules when identifying replacement property in an exchange.

3 Property Rule

The three property rule is the most commonly used identification rule in 1031 exchanges. It states that you can exchange into up to three replacement properties (regardless of their value).

200% Rule

If you want to exchange into more than three replacement properties, you can use the 200% rule. This rule states that you can identify as many replacement properties as you wish, so long as the total aggregate value of those properties does not exceed 200% of the value of your relinquished property.

95% Rule

This is the final and least common identification rule used in 1031 exchanges. The 95% rule states that you can identify as many properties as you like as long as the replacement properties actually acquired amount to at least 95% of the fair market value of all identified properties.

CPEC 1031

CPEC1031 facilitates like-kind exchanges for investors of all sizes. We have more than twenty years of experience acting as qualified intermediaries for clients across the United States. Contact us today to learn more about our services and how we can help you through your exchange. You can find us at our primary office in downtown Minneapolis, or at one of our satellite offices around 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.

© 2019 Copyright Jeffrey R. Peterson All Rights Reserved

What to Do When Replacement Property Competition is High

So you’re in the process of exchanging your property in a 1031 transaction, but competition is high for the replacement properties you’re looking at. What can you do? In this article, we are going to discuss what to do when competition for replacement property is high during your 1031 exchange.

Consider a Reverse Exchange

If you haven’t yet sold your relinquished property, you may be able to do a reverse 1031 exchange in which you first purchase your replacement property before selling your relinquished property. This allows a taxpayer to snatch up a replacement property before another motivated buyer and then sell their relinquished property in a subsequent transaction – all while deferring their capital gains taxes.

Work with a Qualified Intermediary

Working with a qualified intermediary is a great way to find suitable replacement property for your transaction. Your intermediary can walk you through the process step-by-step, explain to you the requirements for identifying replacement property, and even help you find specific properties that fit your needs.

Find Your Replacement Property

If you need help finding the right replacement property for your 1031 exchange, contact the like-kind exchange professionals at CPEC1031 today. Our qualified intermediaries have over two decades of experience working with clients on their 1031 exchanges of real estate. We have the necessary skills to help you identify replacement property, prepare your documents, and answer all of your questions along the way. Contact us today at our downtown Minneapolis office to learn more about the services we provide and to get started with 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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Replacement Property Limitations

In a 1031 exchange, you need to identify property that you wish to exchange into. But there are certain limitations surrounding replacement properties in a 1031 exchange. In this article, we are going to discuss some of these limitations so you can make sure that you don’t run afoul of any requirements in your 1031 exchange.

Time Limitations

First, there are some time limitations that we need to discuss. You only have 180 days total to start and finish your 1031 exchange, and the first 45 of those days are set aside as your identification period. This is the time you have to identify in writing your replacement property or properties. These are strict deadlines.

Property Limitations

In addition to the time restraints, you are also limited by the number of properties you can exchange into. There are a few basic rules that govern these limitations:

• Three Property Rule. You are allowed to identify up to three replacement properties for your exchange.
• 200% Rule. You can identify any amount of replacement properties as long as the total market value of all properties is no more than 200% of the value of your relinquished property.

Twin Cities Real Estate Exchanges

If you are looking to sell real estate, but you don’t want to pay a hefty capital gains tax bill, a 1031 exchange may be the best option for you! Consulting with a qualified intermediary is the first step in any exchange. An experienced intermediary can help you with all the details of your like-kind exchange. Contact us today to discuss your 1031 exchange. Our primary office is located in downtown Minneapolis, but we facilitate exchanges throughout the United States.

• 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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

3 Things to Remember When Identifying 1031 Replacement Property

There are many things to keep in mind when identifying your 1031 replacement property. In this article, we are going to discuss three important things to remember when identifying replacement property in your 1031 exchange.

Identification Deadline

First, it’s important to remember your deadlines and time periods for the exchange. You have 180 days to complete your exchange, beginning the day after you sell your relinquished property. The first 45 days of that period is your identification period. You have to identify in writing all of your intended replacement properties by this deadline.

3 Property & 200 Rules

In most 1031 exchanges, the exchangor can identify up to three replacement properties. If he or she wants to identify more than three properties, the exchangor can use the 200% rule. Using this rule, the taxpayer can identify any number of replacement properties so long as the total fair market value of those replacement properties in no greater than 200% of the relinquished property.

Acquiring Property in the Identification Period

If you actually acquire any of your replacement properties in the midst of your 45 day exchange period, those properties are deemed to have been identified.

MN Qualified Intermediary Services

CPEC1031 has over twenty years of experience helping taxpayers with their 1031 exchanges in Minnesota and across the country. Our qualified intermediaries will work with you through every stage of your 1031 exchange – from the sale of your relinquished property, to the purchase of your replacement property. Reach out to us today to chat about your 1031 exchange. Our primary office is located in downtown Minneapolis but we work with clients throughout the state of Minnesota and across the United States.

• 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.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved