How to Deal with a 1031 Exchange That Spans 2 Tax Years

1031 Exchange Tax Years

In this article, we are going to talk about what you should do if your 1031 exchange spans two tax years.

1031 Deadlines

In a typical 1031 exchange, you have 180 days to complete your exchange after selling your relinquished property. However, that changes if your federal tax filing deadline comes before your 180th day. The IRS requires you to report your relinquished property sale and your replacement property purchase on the same tax return. That means if your tax filing deadline falls inside of your 180 day exchange period, you have to complete your exchange by the filing deadline, rather than the 180th day. If you are doing an exchange as a business entity, things can get even more complicated, since S corps and C corps have a filing deadline of March 15.

It’s important to be aware of these deadlines so you can adjust your timing accordingly, or file for an extension if need be. A qualified intermediary can help you with all of these factors and ensure that your exchange does not fail.

Twin Cities Intermediaries

If you are thinking about doing a 1031 exchange, your first step should be to contact a qualified intermediary who specializes in exchanges of real property. A qualified intermediary can help prepare all of your documents, answer any of your questions, and advise you throughout the exchange process. At Commercial Partners Exchange Company, our intermediaries have twenty years of experience and can help you through every step of your exchange. Contact us today to schedule a time to chat with one of our intermediaries. Our main office is located in downtown Minneapolis, but we help clients throughout the state of Minnesota and the country.

  • 1031 Hotline: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

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