“Related party” may sound like a straightforward concept, but in a 1031 exchange, it can be anything but.
It’s easy to think of related parties as simply members of the same family. But Section 1031 takes a broader view, and those relationships can affect how an exchange is structured and whether special rules apply.
Certain transactions between related parties are subject to additional requirements, including rules that can come into play if the exchanged properties are disposed of within two years.
That makes one step especially important:
Understand the ownership relationships before structuring the exchange.
Ask yourself:
-
Who actually owns the property?
-
What individuals or entities sit behind those ownership interests?
-
What relationships exist among the parties involved?
-
Identifying a potential related-party issue early can help avoid surprises later.
Before the 1031 exchange is designed, understand who is connected to whom and how those connections may impact the transaction.
Qualified Intermediary Services in Minnesota
For qualified intermediary services in Minnesota and beyond, look no further than CPEC1031, LLC! Our team is comprised of experienced 1031 accommodators who have been facilitating 1031 exchanges of all types for decades. Let us guide you through the process and work hand-in-hand to achieve capital gains tax deferral. You can reach us at our Twin Cities office, which is located in the heart of downtown Minneapolis. Please feel free to reach out to our team of 1031 exchange professionals today to learn more about the process and get started!
-
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.
© 2026 Copyright Jeffrey R. Peterson All Rights Reserved
Leave a Reply