If your property is seized, condemned, or destroyed, the IRS gives you time to reinvest and defer capital gains under section 1033 of the Internal Revenue Code. But the clock is ticking, and it’s important to understand when those time periods start and stop.
When Does the 1033 Replacement Period Begin?
Let’s start with the basics. What triggers the beginning of the 1033 replacement period?
It depends on the situation. If your property is subject to storm destruction or theft, then the replacement period would begin on the date of that event—the destruction or theft itself. But if the property is condemned or seized (or even just under threat of condemnation or seizure) the clock can start earlier. It could be:
The date of the actual condemnation or seizure.
The date the threat of seizure began.
The date the property was sold under that threat.
Your replacement period begins whenever one of these occurs (whichever one comes first).
In most situations, you will have two years to complete the 1033 transaction. However, if it’s business or investment real estate, and the conversion was due to condemnation or threat of it, you get three years instead.
Get Your Like-Kind Exchange Started Today
Get your 1031 exchange of investment real estate started today by contacting the team at CPEC1031, LLC. Our qualified intermediaries have decades of experience working on all kinds of 1031 and 1033 exchanges with clients throughout the United States. No matter where your property is located, we can help facilitate your like-kind exchange and make sure you defer 100% of your capital gains taxes on the sale. Contact our team today at our downtown Minneapolis office, where you can learn more about the benefits of 1031 exchange and see how we can help.
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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