Timing Matters in a 1031 Exchange

Timing Matters in a 1031 Exchange

Timing is everything in a 1031 exchange. In this article, we’re talking about the various timing issues that can potentially arise before, during, and after a 1031 exchange.

1031 Timelines

1031 exchanges are governed by strict timelines. You’ve got 180 days total to complete your 1031 exchange. The first 45 of those days are set aside as your identification period, in which you need to identify your replacement property.

If you go over these timelines, your exchange will fail and you will recognize your capital gains taxes. There are still options if you find yourself in this situation (DSTs being one option), but it’s best to avoid exceeding these time frames when possible.

Holding Periods

In addition to the 1031 exchange time periods, you also need to be cognizant of your timing after your complete your exchange. After you complete an exchange, you can’t just turn around and sell your new replacement property right away and reap the sales proceeds. The IRS would see this and invalidate your exchange.

As a general guideline, you want to hold onto your new replacement property for at least 2 years after your transaction before selling or exchanging again.

Save Money on Taxes

If you’re looking to save money on taxes when selling real estate, a 1031 exchange may be just the ticket! When you exchange property under section 1031, you can defer your capital gains taxes as long as you move your sales proceeds into a like-kind replacement property. A qualified intermediary can help you through each and every stage of the 1031 exchange process. Contact our intermediaries today to get a better sense of our services and how we can help you save money on taxes when selling real estate!

  • 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.


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