There are a lot of requirements that you must meet in order to defer your capital gains taxes in a 1031 exchange of real estate. In this article, we are going to walk through an explanation of the two most important timelines in a 1031 exchange: the 45-day identification period and the 180-day exchange period.
180-Day Exchange Period
The first essential timeline you need to be aware of is the 180-day exchange period. In any 1031 exchange (be it a forward, reverse, or build-to-suit exchange), you have just 180 days total from the start of your exchange to the end of your exchange. That timeline can be shortened if your federal tax filing date falls within your 180-day period.
45-Day Identification Period
The second important timeline to keep in mind in a 1031 exchange is the 45-day identification period. This timeline begins at the same time as your 180-day exchange timeline and runs concurrently. During these 45 days, you must give written identification of the replacement properties you intend to exchange into.
1031 Exchanges for US Investors
Any United States investor can use section 1031 of the Internal Revenue Code to defer taxes when selling qualifying real estate. In order to qualify for 1031 treatment, your property must be held primarily for investment or business purposes. Any real estate that you hold primarily for personal use cannot be used in a 1031 transaction. There are a plethora of rules to keep in mind when conducting a 1031 exchange transaction. Make sure you work with a skilled qualified intermediary throughout your exchange to make sure you are satisfying all the requirements of section 1031. Contact CPEC1031, LLC today to get your exchange started!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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