1031 exchange Archives - Commercial Partners Title

January 24, 2019 by Jeff Peterson Leave a Comment

3 Reasons to Consider a 1031 Exchange

There are many reasons why a taxpayer might benefit from a 1031 exchange of real estate, but many people aren’t sure why they should consider a 1031. In this article, we are going to talk about 3 reasons you might want to consider a 1031 exchange.

Defer Your Capital Gains Taxes

Let’s start with the basics. A 1031 exchange allows you to defer your capital gains taxes when selling real estate. Instead of pocketing the sales proceeds from the sale of a property, you move those proceeds into a replacement property. This allows you to defer your capital gains taxes on the sale and keep your money working for you in a continued investment.

Diversify Your Portfolio

1031 exchanges allow you to get into or out of certain segments of the market. This can help you diversify your portfolio, especially as you get closer to retirement age.

Move to a Different Geographic Area

If you are planning to move to a different area and you don’t want to have the burden of managing a property from afar, you can 1031 exchange out of that property and into a new replacement property located closer to where you are moving.

1031 Exchanges with Commercial Partners

At Commercial Partners Exchange Company, we specialize in facilitating 1031 exchanges under the Internal Revenue Code. Whether you’re exchanging an apartment complex, a piece or farmland, or another investment property – we have the resources to help you through the 1031 exchange process. Contact us today to learn more about our like-kind exchange services and get your exchange off the ground. Our team can answer all of your questions, advise you on property identification, and even prepare your 1031 documents for you. Find us at our downtown Minneapolis office and reach out to our professionals today!

January 22, 2019 by Jeff Peterson Leave a Comment

How to Report Your 1031 Exchange on Your Taxes

With tax season approaching, many taxpayers have questions about what they need to report and how they should go about doing so. This is especially true for taxpayers who have conducted a 1031 exchange in 2018. In this article, we will discuss how to appropriately report your 1031 exchange when you file your taxes for 2018.

Use Form 8824

First, to state the obvious. Yes, you do need to report your 1031 exchange to the IRS. You do so via form 8824, which tells the IRS where the net proceeds from your 1031 exchange went. When you sell a property, your title company or closing agent is required to report that to the IRS via form 1099. Filing form 8824 explains to the IRS that this sale was a 1031 exchange transaction.

Click on the link below to get a copy of form 8824:

Form 8824

Consult with Your CPA

You should consult with your CPA on all of this. If you haven’t already, inform them of your 1031 exchange and they will be able to help you report it in your tax filing. In fact, it’s a good idea to involve your CPA in the 1031 exchange process early on. They know your tax situation better than anyone and can advise you on how an exchange will impact your tax situation.

Get the Help You Need with Your 1031 Exchange

If you need help with the tax reporting requirements of your 1031 exchange – or anything else related to your like-kind exchange – contact Commercial Partners Exchange Company today. Our qualified intermediaries have more than two decades of experience facilitating exchanges in all industries. We have the knowledge and expertise needed to walk you through your exchange. Contact us today at our office in downtown Minneapolis to set up a time to chat with one of our qualified intermediaries about your exchange.

January 21, 2019 by Jeff Peterson Leave a Comment

Can You 1031 Exchange Cryptocurrency?

Cryptocurrency is still relatively new and, as a result, there are a lot of questions about how it operates and how it should be taxed. One question many people have is “can cryptocurrency be exchanged under section 1031?” In this article, we are going to discuss whether or not it’s possible to exchange bitcoin and other cryptocurrency under section 1031 of the Internal Revenue Code.

Real Property vs. Personal Property

The short answer to the question at hand is, no. Cryptocurrency cannot be exchanged under section 1031 of the Internal Revenue Code. But why is that the case? It all comes down to real property vs. personal property.

The question of exchanging cryptocurrency was hotly debated until last year when the Tax Cuts & Jobs Act went into effect. Prior to this new law, taxpayers could defer their capital gains taxes on both real estate and personal property. The TCJA explicitly limited 1031 exchanges to real property, and excludes personal property outright. Since cryptocurrency is not classified as real property, it is not allowable under section 1031.

Get the 1031 Exchange Help You Need

Our 1031 intermediaries have twenty years of experience in the 1031 exchange field and understand the like-kind exchange process inside and out. We can guide you through each step of the process, while advising you, answering questions, and preparing your 1031 documentation. Reach out to the qualified intermediaries at Commercial Partners Exchange Company today to learn more about your 1031 exchange options. Our main office is located in downtown Minneapolis but we serve clients throughout Minnesota and the United States.

January 14, 2019 by Jeff Peterson Leave a Comment

6 Steps to a Successful 1031 Exchange

There are many steps to a 1031 exchange, but the process can be boiled down to 6 important milestones. In this article, we are going to walk through the necessary steps to complete a successful 1031 exchange of real estate.

Step 1 – What is Your Gain?

First of all, you need to determine whether or not it makes fiscal sense to do a 1031 exchange vs. and outright sale of your property. This involves calculating your potential capital gains taxes and how much you would save if you did a 1031 exchange.

Step 2 – Does Your Property Qualify?

Before you begin the process you also need to determine whether or not your property qualifies for 1031 treatment. In order to qualify, your property has to be held for investment or business purposes, not for personal use.

Step 3 – Contact a Qualified Intermediary

Once you’ve decided to do an exchange, you need to sign the purchase agreement for your relinquished property. If you haven’t already at this point, it’s time to contact a qualified intermediary so they can insert a cooperation clause into your purchase agreement.

Step 4 – Close on Your Relinquished Property

Next it’s time to close on your relinquished property. Be sure you have all of your required closing documents prepared. Your 1031 intermediary can prepare all of these for you.

Step 5 – Replacement Property Identification

Once you’ve sold your relinquished property, you have 45 days to identify in writing your replacement property.

Step 6 – Close on Your Replacement Property

Finally, you need to close on your replacement property within the 180 day exchange period.

Commercial Partners in Minneapolis, MN

The 1031 intermediaries at Commercial Partners Exchange Company have more than two decades of experience working on 1031 exchanges of all shapes and sizes. Using our extensive experience, we can make sure your exchange goes off without any issues. We can also handle all the necessary document preparation and advise you on which replacement properties to identify. Contact our intermediaries today at our downtown Minneapolis office to learn more about our range of services and to get your 1031 exchange off the ground.