Reasons to Seriously Consider a 1031 Exchange in 2025

There are many excellent reasons to conduct a 1031 exchange of investment real estate, but many taxpayers are unaware of these benefits. In this article, we are going to outline a couple reasons to consider a 1031 exchange in the year 2025.

Defer Your Capital Gains Tax Burden

The biggest benefit of a 1031 exchange is capital gains tax deferral. When you sell a piece of investment real estate in a straight forward sale, you are likely going to be hit with a huge capital gains tax bill. In fact, this is something that prevents many taxpayers from selling their property at all. Section 1031 offers the excellent incentive of tax deferral when you reinvest the net proceeds into a replacement property.

Move to a Different Location

1031 exchange can be conducted between properties in any location within the bounds of the United States. You can exchange out of a property in Minnesota and into a property in Arizona, so long as you meet all the requirements of section 1031. This is a great way to set yourself up for a move to a different location, while deferring a large capital gains tax bill.

Minnesota-Based Qualified Intermediaries

At CPEC1031, LLC, our Minnesota-based qualified intermediaries are here to help you defer capital gains taxes using section 1031 of the Internal Revenue Code. This powerful tax provision can help you keep your hard-earned money working for you in a continuation of investment. The best part is that any US taxpayer can utilize section 1031 for tax deferral. Contact our 1031 professionals today at our downtown Minneapolis offices to learn more about the process and how we can help you save money on your next sale of 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video – Alternative Products You can 1031 Exchange Into

Many people ask about the variety of different replacement property options that are available in a 1031 exchange and what exactly constitutes “like-kind” in the realm of real estate.

If you’re exchanging a duplex can you exchange into something completely different such as an oil and gas program? In fact there are 1031 compliant oil and gas programs that you can exchange into. There are also tenant-in-common arrangements that you can exchange into, as well as Delaware Statutory Trusts (DSTs), some of which convert into a 721 contribution of the underlying real estate into an UPREIT. So there’s a great variety of different products that you can 1031 exchange into.

One of the common themes with all of these options is that they are passive investments that allow you to work smarter, not harder.

1031 Exchange Services

A 1031 exchange is a powerful vehicle for tax-savings for owners of investment real estate. Under section 1031 of the Internal Revenue Code, you are allowed to defer capital gains taxes on the sale of qualifying real property when you reinvest your net proceeds into like-kind replacement property. Once you begin the process you must complete everything within 180 days so it’s important to adequately prepare. The best way to set yourself up for success is to coordinate with an experienced 1031 intermediary at CPEC1031, LLC.

• 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video - 1031 Exchange Tips for Tax Season

If you recently completed a 1031 exchange and you need to report it to the IRS, you may need to assemble some information to allow your tax preparer to put together everything required to file your federal tax return.

Your tax preparer will need to fill out form 8824, which is essentially a worksheet that helps the IRS connect the dots between the properties that were sold and received during the 1031 exchange. This form requires a lot of information. Here’s some of the information you can assemble and provide to your taxpayer in advance of the tax filing deadline:

• If you used a qualified intermediary, you may have received a closeout or summary letter that provides all of the critical dates and explains how your exchange funds were utilized.

• As to the relinquished property, you can provide a pdf copy of the final signed closing statement that summarizes how the monies were spent.

• Provide the deed or conveyance document that was used to convey the ownership of the property to the purchaser.

• If you received a 1099-S, this is another great document to provide your tax preparer.

• Once you sold your relinquished property, you may have identified your replacement property within the 45 day identification period. If you did, you’ll want to provide a copy of that identification form to your tax preparer together with proof that it was timely sent to the recipient.

• When you closed on your replacement property, you probably had a closing statement showing the funds coming in, the purchase price, the closing date, and various transactional expenses. This is a great thing to provide your tax preparer as well.

• Sometimes, mistakes happen during closings and they need to be corrected. If you received a corrected document after closing, that’s important to give to your accountant so they’re working with updated information.

1031 Exchange Help

CPEC1031, LLC offers qualified intermediary services for taxpayers considering a 1031 exchange of real estate. A like-kind exchange is a great way to defer capital gains taxes on the sale of real estate by continuing your investment into a bigger replacement property. In order to defer all of your gains, you need to abide by the rules set out by section 1031 of the Internal Revenue Code. Work with a qualified intermediary on your exchange to ensure that you meet all the required benchmarks. Reach out to the intermediaries at CPEC1031, LLC today to see if a 1031 exchange is right for you!

• 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Video – 1031 Exchanges Involving A Non-Titled Spouse

Let’s say you bought a property before marriage and you own it in your own individual name. Twenty years later it’s appreciated a lot in value. Now that you’re doing a 1031 exchange, how do you deal with the fact that your non-titled spouse may want to be on the title to the replacement property? The same taxpayer requirement says that the taxpayer that owns the relinquished property needs to acquire the replacement property. All of the exchange funds for that taxpayer need to be used exclusively to purchase that taxpayer’s interest in the replacement property.

This can be a tricky dynamic to deal with during a 1031 exchange. If you want your spouse to be in title with you, it may be best to add cash for that spouse’s proportionate share of the property because your exchange funds need to be used for your proportionate share of the purchase. This is also a question that can be complicated by whether or not you (or the property) reside in a community property state, such as Texas, Wisconsin, etc.

When you have these questions it’s good to surround yourself with a good accountant, attorney, and qualified intermediary.

Talk with a Qualified Intermediary

Talk with a qualified intermediary at CPEC1031, LLC today about your next 1031 exchange today. Our team of skilled intermediaries has been facilitating exchanges under section 1031 of the Internal Revenue Code for more than two decades. We can help you navigate the process and find the answers you’re looking for. Contact us today at our downtown Minneapolis offices 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved

Tax Documents to Compile After Completing a 1031 Exchange

After completing your 1031 Exchange, what documents should you provide to your tax preparer to complete your tax return?

Your Certified Public Accountant (CPA) or tax accounting preparer will need specific information to verify and substantiate the details provided to the Internal Revenue Service (IRS) on IRS Form 8824.

Here’s a checklist of essential documents you can easily provide to expedite the completion of your tax return:

• Close-out letter from your qualified intermediary summarizing the 1031 exchange, detailing how your funds were utilized and the closing dates.

• PDF copy of the final signed Relinquished Property Closing Statement from the sale of your old investment or business real estate.

• PDF copy of the deed or other transfer document conveying ownership of the Relinquished Property to the purchaser.

• If you received a 1099-S from the closing agent, title closing, escrow officer, law firm, or individual responsible for the transaction, provide it to your CPA or tax accounting preparer. This document serves as proof of the gross proceeds from the sale or the cash you were entitled to receive as the transferor, potentially confirming the closing date.

• If you’re incurring unusual or non-standard transactional expenses or making financial concessions to the purchaser as per the terms of the sale contract (with any applicable amendments) with the buyer, you should also provide a PDF copy of the sale contract (purchase agreement). This document demonstrates your obligation to pay these transactional expenses or financial concessions, such as a repair allowance or partial rebate of the purchase price.

If you sent a 1031 replacement property identification form to your qualified intermediary or another party involved in the transaction during the 45-day identification period, you must provide a PDF copy of the final signed and sent document. This document should include information and confirmation that it was properly and timely sent. Additionally, it may be beneficial to include an acknowledgment of receipt.

The PDF copy should include the following:

• A PDF copy of the final signed replacement property closing statement from the sale of your old investment or business real estate.

• A PDF copy of the replacement property deed or other transfer document through which you received the ownership of the replacement property from the seller.

• Any corrected or changed documents that may have occurred after the closings, such as refunds for improperly calculated payoffs of real property taxes or mortgages, deeds of trust, or closing charges.

• A PDF copy of all of your fully signed 1031 documents, including your exchange agreement, assignment agreements, notices, and written verification of the use or return of unused 1031 exchange funds (if applicable).

Qualified Intermediaries Near You

Find a qualified intermediary near you to get your 1031 exchange questions answered. CPEC1031, LLC has been facilitating like-kind exchanges under section 1031 for more than two decades. Our skilled 1031 exchange professionals are here to guide you through the complex 1031 exchange process and make sure you have all your bases covered throughout the scope of your exchange. Contact us today at our downtown Minneapolis office to learn more about the services we offer and how we can help with your next 1031 exchange of 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.

© 2025 Copyright Jeffrey R. Peterson All Rights Reserved