4 Reasons to Consider a 1031 Exchange

There are many reasons to consider engaging in a 1031 exchange, but many taxpayers may not be aware of them. In this article, we are going to discuss a handful of reasons to consider a 1031 exchange.

Why 1031?

• Keep your money working for you. Rather than pay unnecessary taxes, use the money to purchase more investment property.

• Compound your wealth. Maximize returns by moving equity to the most advantageous investments available.

• Eliminate troublesome properties. In order to avoid extensive management and maintenance problems, sell older properties in exchange for new less management intensive properties.

• Diversify your investments. Exchange out of one relinquished property into multiple replacement properties to expand your portfolio into different geographic areas or business segments.

Is it “Cashing Out”?

No. The government’s goal in deferring taxes on exchanges is to encourage investors to continue to buy and sell property. The justification? If an individual is NOT cashing out, why should the IRS tax them on the “theoretical gain” in an exchange from one like-kind property to another?

How to Learn More?

Whether you are considering a Straight Forward Exchange, Reverse Exchange, Build-To-Suit Construction Exchange, or something else choose the right partner.

Get the Help You Need with Your 1031 Exchange

Get the help you need with your 1031 exchange today by contacting a qualified intermediary. At CPEC1031, our intermediaries have over twenty years of experience assisting clients from around the United States on their 1031 exchanges. Reach out to our like-kind exchange specialists today to learn more about the 1031 exchange process and how it can help you save money in capital gains taxes. We are here to help. Find us at our main 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

Helpful 1031 Exchange Links & Resources

1031 exchanges are complex and no exchange is alike. In this article, we provide links to various forms and websites that may be useful to those engaging in a 1031 exchange.

IRS

• IRS Notice 2020-23 (Relief for Taxpayers Affected by the COVID-19 Pandemic)

• IRS Resources

• IRS Form 8824

• IRS Publication 544

• IRS Section 121

• Treasury Regulation 1.1031(k)-1(b)

• Cornell Law Library

• Section 1033 - Involuntary Conversion

• 1031 Treasury Regulations

• Text of Section 1031

• Like-Kind Exchanges Under IRC Code Section 1031

• 10 Questions & Concerns for Maximizing Like-Kind Exchanges

• Deed Tax

• IRS Publication 527 - Residential Rental Property

• Internal Revenue Bulletin: 2007-34

Minnesota 1031 Resources

• Minnesota Deed Tax on Exchanges of Real Property

• Minnesota Deed Tax Exemptions

• Minnesota 1031 Exchange Service Area

• Minn. Stat. 289A.12

California 1031 Resources

• California Withholding Exemption Forms

• California Forms & Instructions for 593-C and 593-E

• CA Form 3840: California Like-Kind Exchanges

• Reverse Exchange Revenue Procedure 2000-37

• Safe Harbor - Internal Revenue Bulletin: 2008-10

• Open Issues in Section 1031 Like-Kind Exchanges

Florida 1031 Resources

• Florida Admin Rule 12B-4.014

• Florida Transfer Tax Exemption for EAT as Agent

• Florida Disaster Relief - Hurricane Irma

Private Letter Rulings & Relevant 1031 Cases

• Moore v. Commissioner

• Rev. Proc. 87-56

• Rev. Proc. 2002-69

• PLR-133610-07 - Regarding Exchanging Development Rights

• PLR - Improvements on property owned by the taxpayer or a related party to complete a 1031 Exchange

• PLR - Related party also doing a 1031

• PLR - US Virgin Islands

• PLR-125107-13

• Sample Cooperation Clause

• Estate of Bartell Ruling

• Private Letter Ruling 200625009

• Private Letter Ruling 200625010

• State of New York Advisory Opinion

If you have any other questions about a 1031 exchange do not hesitate to contact us today.

Twin Cities 1031 Exchanges

CPEC1031 works with clients from all over the United States on their 1031 exchanges. With over two decades of experience behind us, we have the skills and knowledge to help you through the specifics of your exchange. Our intermediaries can prepare your documents, answer your questions, and make sure you are fully prepared when it comes time to close on your transaction. Contact us today to learn more about the like-kind exchange process and see 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

2 Lesser Utilized Options to Consider when Concluding a 1031 Exchange

There are a number of options at your disposal when concluding a 1031 exchange of real estate. In this article, we are going to discuss a couple of lesser utilized options to consider when choosing replacement property in a 1031 exchange.

Deferred Sales Trust

If the exchange fails or partially fails, rather than take back the unutilized/unspent 1031 funds in immediately taxable cash, you may receive back an installment note (in which at least one payment will be received by you after the tax year in which the Relinquished Property sale occurred) for the amount due from the qualified intermediary and then you may elect to be taxed on the installment method so you only have to include in your income each year the amount of gain on the payments (and any debt relief) that you actually receive.

Fail to Exchange

Have the exchange fail (or partially fail) and take back the unused 1031 funds, and pay your taxes on the amount of gain that is recognized. Note: You may be able to mitigate a failed (or partially failed) 1031 by purchasing certain oil and gas investments (that provide current intangible drilling costs deductions) which may be used to offset some or all of the recognized gain.

Like-Kind Exchange Resources

At CPEC1031 we offer support for taxpayers conducting like-kind exchanges in Minnesota and across the country. Our qualified intermediaries have two decades of experience facilitating exchanges of all types. We put this experience to work on all exchanges and can answer all of your questions, prepare all of your documentation, and help you find appropriate replacement property. Contact us today to learn more about our 1031 exchange services or to start the process of your exchange and start saving money in capital gains taxes today!

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

1031 Exchange Case Studies – In the Words of Our Clients

Every 1031 exchange is unique. In this article, we provide a few 1031 case studies in the words of our clients.

John Nolde

I have worked with Jeff on numerous 1031 Exchanges in connection with real estate and affordable housing transactions. He and his team are knowledgeable, responsive, and make the exchange process seamless, with the best possible outcome for each client.  He provides creative solutions to complex problems, and is a true partner in the process.

Al Richie

From the common to the sublime 1031 nuances, Jeff Peterson exhibits perhaps the most brilliant legal mind steeped in common sense  that most all of us have ever seen in our lifetime. Jeff has guided us through a number of transactions that we could never have experienced were it not for him and we can only encourage you to explore the depth and creativity  that Jeff offers and we thank him for his dedicated contributions to the entire  area of real estate development and our community.

Amber Garofalo

Jeff and his team are experts in the 1031 exchange process.  They are responsive, professional and accurate.  I highly recommend CPEC 1031 to anyone who is looking to avoid the taxable penalties with selling an investment or commercial property.

1031 Exchange Intermediaries

At CPEC1031, we provide 1031 exchange services to taxpayers throughout the United States. Our team has more than twenty years of experience facilitating exchanges of all types and we are well-equipped to guide you through your transaction. We can guide you through the exchange process, compile all your documents, and answer all of your questions along the way. Contact us today to learn more about our like-kind exchange services and see how we can help you save money in capital gains taxes.

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

Should I Start a 1031 Exchange During the COVID-19 Pandemic?

The ongoing coronavirus pandemic has a lot of real estate investors confused and frustrated – and rightly so. This is certainly the case among those considering 1031 exchanges right now. In this article, we are going to discuss whether or not you should consider starting a 1031 exchange during the COVID-19 pandemic.

Finding the Right Time

Timing is important in any real estate deal. Many taxpayers are hesitant to begin a 1031 exchange right now due to the uncertainty in the air at the moment. But this doesn’t mean you should completely avoid beginning your exchange. It’s possible that you may be able to find some great deals on replacement property right now because others are choosing to delay their exchanges.

Talk to a Qualified Intermediary

Ultimately, the best thing you can do is talk with a qualified intermediary about your specific situation to see if now is the best time to begin your 1031 exchange. An intermediary will be able to examine your unique situation and offer guidance on how to proceed.

Qualified Intermediaries in Minnesota

At CPEC1031, we facilitate 1031 exchange transactions in Minnesota and across the country. Our qualified intermediaries have over twenty years of experience with all types of exchanges. We can put that experience to work on your exchange and answer all of your questions during the process. Give us a call today to discuss the details of your next exchange and how we can help save you money in capital gains taxes. You can find us at our main office in 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved