1031 exchange Archives - Commercial Partners Title

June 14, 2021 by Jeff Peterson

How to Use Reverse 1031 Exchanges with Multi-Family Property

If you’re in the multifamily area, you know that the market is HOT and competition is fierce. If you’re trying to do a 1031 exchange, it may be advantageous for you to lock up a replacement property so you know you’ve got a sure thing to exchange into.

Your Options

You don’t want to be playing musical chairs, and at the end of your 45 day identification period have no chairs to land on. With that in mind, here are your options:

Tie up the replacement property with a patient seller who will let you hold the property on the shelf so that once you sell your relinquished property you’ve got something under contract to roll into; or
If the seller is impatient, and you have to close first on the replacement property, then do a reverse 1031 exchange. Have the qualified intermediary form an LLC to acquire the replacement property and hold it for you for up to 180 days so that you’ve got a sure thing waiting for you to exchange into.

Now paying for the property without the proceeds of the sale of your relinquished property can be a trick. That’s where working with your lender and having your cash lined up will make you the most competitive and capable purchaser to lock down a replacement property.

June 10, 2021 by Jeff Peterson

A 1031 Exchange is the Best Way to Defer Capital Gains Tax when Selling Real Estate

Capital gains taxes are a big point of concern for any taxpayer considering a sale of real property. Section 1031 of the Internal Revenue Code offers a method for deferring capital gains taxes on the sale of real estate. In this article, we are going to explain how a 1031 exchange is the best way to defer capital gains taxes when selling real estate.

The 1031 Exchange Process

Let’s start with a brief breakdown of the 1031 exchange process. The idea behind section 1031 is that instead of selling property in an outright sale, you exchange your property for a newer, bigger replacement property. Here’s how the process typically works:

You sell your relinquished property.
You identify new replacement property.
You redeploy your net proceeds from the relinquished property into the replacement property.

The Result? Capital Gains Tax Deferral

If you meet all the necessary requirements, you will be able to defer 100% of your capital gains tax burden on the sale. Depending on the property in question, this can result in a HUGE tax savings.

Defer Capital Gains Taxes

If you are looking to sell a piece of investment real estate, but are hesitating because of the potential capital gains taxes, then a 1031 exchange may be right for you! Contact one of the 1031 exchange professionals at Commercial Partners today to learn more about the process of exchanging property under section 1031 of the Internal Revenue Code. Our qualified intermediaries have over two decades of experience helping clients with their real estate exchanges. Contact us today at our Minneapolis office or one of our satellite offices around the country to set up a time to chat.

June 8, 2021 by Jeff Peterson

Investment or Business Properties Qualify for 1031 Exchange, But Be Careful with House Flips

One question a lot of taxpayers have when it comes to 1031 exchanges is “can I do a 1031 exchange on flipped property?” The short answer is no, but you there are other ways to structure your exchange in order to qualify.

Don’t Hold for Resale

You don’t want to be seen as holding primarily for “resale” because that will NOT qualify for 1031. The question becomes, are you holding the property for investment or business purposes or are you holding it for inventory for sale to the public?

The length of time a property is owned is but one of the many factors looked at to determine if you have held the relinquished property for the qualified purpose of investment or business purposes, as opposed to holding primarily for resale (flipping). One good year of rental is a good rule of thumb but the longer the better.

Having an unsolicited offer may be a good detail in this facts and circumstances analysis…if you go for a shorter hold period…but that’s perhaps more risky.

June 7, 2021 by Jeff Peterson

Talk to a Qualified Intermediary Before Starting Your 1031 Exchange

If you’re considering a 1031 exchange of your real estate, the best thing you can do is contact a qualified intermediary to discuss your exchange. But why is it so important to involve an intermediary in your exchange? In this article, we are going to talk about why it’s a good idea to consult a qualified intermediary before diving into your 1031 exchange.

Qualified Intermediaries – Why They’re Important

Qualified intermediaries are experts on 1031 exchange transactions. They know the laws and regulations that need to be followed to carry out a successful exchange. As a result, they can advise you on the best direction to take with your 1031 exchange, and answer any lingering questions you might have.

A qualified intermediary is your guide through every step of your 1031 exchange. They can help you deal with the technical aspects of your exchange, and draft up your 1031 exchange documents.

Minnesota 1031 Accommodators

If you are interested in learning more about the tax deferral benefits of a 1031 exchange, contact one of the qualified intermediaries at Commercial Partners today. We have been helping investors with their 1031 exchanges for more than twenty years. Our intermediaries are well versed in the rules and regulations that govern 1031 exchanges, and can help ensure that your exchange goes off without a hitch. Contact us today to see if you are a good candidate for a 1031 exchange.