I get a lot of calls from accountants who say: “I didn’t know my client was doing a 1031 exchange and I filed their tax return on time before the closing of the replacement property, effectively shutting down their exchange early. They want to know if they can amend the tax return to include the replacement property.” If you’re an accountant or a CPA, make it part of your process to ask the client if they’re in the midst of an exchange. At CPEC1031, we send out a written letter to the taxpayer that gives them their estimated 45 day deadline and 180 day deadline. If those deadlines fall after t ..read more

We talk a lot about the initial steps involved in a 1031 exchange of real estate. We don’t talk nearly as much about the final steps in a like-kind exchange. In this article, we are going to discuss the last step in a 1031 exchange of real property. The Final Stages of a 1031 Exchange Technically, your 1031 exchange will end on the last day of your 180 day exchange period. The specific final step of your exchange will depend greatly on the type of exchange you are conducting and various other factors unique to your situation. In a typical forward exchange, the final steps will include closing ..read more

In a 1031 exchange, is it possible to identify to someone other than the qualified intermediary? Let’s say you are a syndicator and you have a client who said they were going to buy into one of your DSTs, but forgot to identify, and now they want to close into your DST. To answer this question, let’s talk about the basic rules for identifying property in a 1031 exchange. First, your identification needs to be in writing. The writing also needs to clearly describe the property. That identification also needs to be signed by the taxpayer. So yes, you can potentially identify to the seller of the ..read more

In the event that you go from chicken coop to raw land and there’s a percentage that’s 1245 property, are you liable for the tax on the entire deal or just the tax on the depreciation on that 1245 property. This might be a planning opportunity because before you sell your chicken coop to the buyer, you may want to say in the purchase agreement: “let’s agree on the allocation of price between the land that I’m selling you and this worn out chicken coop.” You as the seller probably want to minimize the value allocated to the chicken coop building improvement that you’ve written off and you want ..read more

1031 exchanges come in a variety of types. One such type, perhaps the most common, is the simultaneous 1031 exchange. In this article, we are going to explain how exactly a simultaneous 1031 exchange works and when you may want to consider one. How a Simultaneous 1031 Exchange Works A simultaneous 1031 exchange is a type of like-kind exchange in which the relinquished property is sold and, immediately after, the replacement property is acquired. The Benefits of a Simultaneous 1031 Exchange The benefits of a simultaneous 1031 exchange are the same as any type of 1031 exchange – capital gains t ..read more

Let’s say that you’re a farmer. You own a piece of land. On that land is a chicken coop and maybe some other agricultural buildings. What can you do with real property improvements that helps your current tax situation? You can’t depreciate land or dirt, but real property improvements can be depreciated so you can accelerate the depreciation on components that you own. You can use those accelerated deductions to offset your gains in other areas. If you’re a real estate professional, you might have almost unfettered ability to take those paper losses and use them against your other income. Now ..read more

Recently, we had a client come to us with a unique 1031 exchange situation. In this article, we are going to dig into that question and provide an answer. The Question Here’s the 1031 exchange question, according to the client: “We have a potential buyer for the relinquished property in St. Paul that wants to be able to force a purchase price allocation as part of the purchase agreement. Their concern is the effect the purchase price will have on the assessed value of the property. They want to do an eCRV that shows a substantial amount of the purchase price being allocated to Goo ..read more

The first step in any like-kind exchange is figuring out if you can even do one with the property in question. To that end, you need to determine whether your property qualifies for 1031 treatment. In this article, we are going to talk about the best way to determine if your property can be used in a like-kind exchange. Is Your Property Held for a Qualifying Purpose? The most important question you need to ask yourself prior to conducting a 1031 exchange is this: “is my property held for a qualifying purpose?” Any and all property involved in a like-kind exchange must be held for a qualifying ..read more

We recently held a virtual and in-person workshop called New & Exciting 1031 Exchange Strategies & Techniques. For those who missed the presentation, or for those who were in attendance but wish to revisit, here’s the full recording of the presentation. Level up your tax knowledge to maximize the potential of your real estate investments. Join top experts for this live in-person advanced workshop with online live streaming to learn advanced strategies and 1031 exchange techniques. Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-10 ..read more

Timing is an essential part of all 1031 exchanges of real estate. In this article, we are going to talk about some situations in which you might want to consider delaying the start of your 1031 exchange. When to Delay Your 1031 Exchange Here are some situations in which you may want to delay your 1031 exchange: It’s the Wrong Time of Year. While you can start a 1031 exchange at any time of year, there may be tax considerations to bear in mind when your exchange straddles two separate years. You Can’t Find Suitable Replacement Property. Another reason you may consider delaying is if you ca ..read more