Videos

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Video - Can You 1031 Exchange Between Residential & Commercial Property?

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If you’re selling a commercial property, can you also do a 1031 exchange and purchase a residential property? The answer is almost all real estate in the United States is considered like-kind. Commercial, residential, retail, agricultural – it’s all real estate. So you can sell a commercial building and buy a residential property in a 1031 exchange. Remember, both the relinquished property and the replacement property must be held for investment or business purposes. So if you buy a vacation condo on the coast of Sanibel Island, you need to use it for investment or business purposes if you want to qualify for a 1031 exchange on that property. In a 1031 exchange you have to hold the property primarily for investment or business purposes in order to garner the lucrative tax deferral offered by section 1031.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Video - Can You Do a 1031 Exchange with Your Spouse?

When you’re doing a 1031 exchange you want to go from apples to apples. If Stephon owns the relinquished property, Stephon has to buy the replacement property. Maybe Stephon bought the property prior to getting married and owns it in his own name alone, without his spouse in title. Whose property is it for federal tax purposes? In non community property states, a spouse that is married still owns the property and their spouse only has an intangible interest in their property until a divorce decree states that non-titled spouse has an interest in the property, they don’t have an interest in the property. When Stephon sells his relinquished property in a 1031 exchange, Stephon should be the one who purchases the replacement property because Stephon’s exchange funds need to be used exclusively for the purchase of his replacement property. He can’t siphon off some of his equity to pay for his spouse’s portion of the property that’s being purchased.

What if your spouse absolutely wants to go into title with you? Perhaps the spouse can pony up some money and pay for their proportionate share of the property. Maybe it’s 99% Stephon and 1% Stephon’s spouse and that money that is contributed comes from the spouse’s own funds, whereas the 1031 funds are used exclusively for the 1031 exchange portion of the purchase. That way you can have both spouses on title, which may be a requirement of your lender, but we aren’t jeopardizing the exchange.

Now, laws differ from state to state. In community property states where a spouse may be considered to have an ownership interest in the real estate even if they’re not in title, that can change the analysis. So it’s always important to consult with local counsel so you can get the best advice specific to your situation.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Video - Be Careful When Selling 1031 Exchange Property to Family Members

In a 1031 exchange, a relinquished property could be sold to anyone – even a related party. But if you’re selling to a related party, know that you’ll have to disclose that on form 8824 and that the related party may have to hold the property for two years after acquiring it. If they sell that property too quickly they could end up foiling 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Video - What’s the Difference Between 1031 and 1033 Exchanges?

You might be selling your property to the government in a condemnation or seizure – an involuntary sale. The kissing cousin to section 1031 is section 1033 that allows for a deferral of gains when you involuntarily sell your property. In 1033 you don’t need a qualified intermediary to hold your proceeds. You’re allowed to hold your proceeds and you have to continue your investment into replacement property within certain timeframes. 1033s are typically advised by and coordinated through your accountant. You may have to file an election for the year in which you receive your first payment. You may also need to file form 8824 to report the transaction. 1033s differ from 1031s in that you have a longer period of time to reinvest and you’re allowed to hold your own proceeds.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Video - How a Qualified Intermediary Safeguards 1031 Exchange Funds

When you’re acting as a qualified intermediary, you have a fiduciary obligation to safeguard and protect the funds that are placed in your custody. In order to safeguard the funds correctly, it’s probably a good idea not to comingle the funds with any other client’s monies or with the operating account of the intermediary. Having a separate, segregated account for each client’s monies is a good idea. Furthermore, it’s a good idea to have a qualified escrow deposit agreement signed by the bank that’s holding that deposit stating that the bank won’t release any funds without the client’s written authorization. We can build in further safety protocols by having a verbal call back arrangement where the bank calls the client to confirm via password that their signature is correct and that the movement of the funds is authorized.

  • 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.

© 2023 Copyright Jeffrey R. Peterson All Rights Reserved

Defer the tax. MAXIMIZE your gain.