After the Starker case in the 1970s, the IRS got authorization from Congress to start writing some regulations with the goal of putting up some guardrails around 1031 exchanges. In the 1980s, they implemented the 45 day identification period and the 180 day exchange period.
The Importance of Nailing Down Your Closing Date
It’s essential to know your closing date because these time periods track off of that date. Sometimes we see closing statements where the print date, the close date, and the disbursement date are all different. In this situation it can be difficult to pin down the actual date of closing for 1031 exchange purposes. For the mercy of your intermediary and your accountant, make sure you emphasize the exact date of transfer on your settlement statement.
The date of your closing is day zero (you don’t count it towards your 1031 time frames). Both your 45 day identification clock and your 180 day exchange clock run concurrently after the date of closing. You don’t get 45 days and then another 180 days. They run together.
A trap for the unwary is that you may not get your full 180 days if your federal income tax deadline pops up within that 180 day period. If you started your exchange late in the year, you may not get your full exchange period unless you extend your tax filing deadline.
Contact a Qualified Intermediary at CPEC1031, LLC
To get hep with your next 1031 exchange, contact a qualified intermediary at CPEC1031, LLC today. Our team has decades of experience facilitating like-kind exchange transactions across the United States. Let us put our experience to work on your next exchange and ensure you defer 100% of your capital gains taxes. We are standing by and ready to answer all of your 1031 exchange related questions. You can find us at our primary offices, which are located in the heart of downtown Minneapolis, MN.
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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