In a 1031 exchange there are two critical deadlines you need to know about:
- The 45 Day Identification period
- The 180 Day Exchange Period
When you begin a 1031 exchange, the day of closing is considered day zero. After that you have 180 days to complete your exchange. But the critical time frame is the first 45 days of that 180 day period because that’s the time you have to designate (or identify) your replacement property or properties. Determine your 45 day / 180 day deadlines using our calculator.
This all sounds simple – 45 days to identify, 180 days to complete, with both clocks running concurrently. But wait a minute. The IRS throws you a curveball. They say:
“We don’t want to wait until next year’s tax return to see the full picture. We want this all reported to us on one tax return.”
So you might have 180 days to complete your exchange, but if your deadline for filing your federal tax return (April 15 for individuals, March 15 for corporations) pops up within that 180 day period, they shorten your 180 days to your federal tax filing deadline. That’s a big trap for the unwary. But it’s an easy problem to sidestep.
All you need to do is ask your CPA to file for an extension of your federal filing deadline. For example, an individual who files on April 15th can get an automatic extension of the deadline to October 15, thus enabling them to use all of their 180 day exchange period.
- 1031 Hotline: If you have questions about 1031 time frames, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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