The simple answer is yes – you can get out of a 1031 exchange after you’ve begun the process. But how exactly do you do that and what are the implications? In this article, we are going to talk about how you can get out of a 1031 exchange after starting the process
The easiest way to back out of your 1031 exchange after it has begun is to simply run out the clock on your 180 day exchange period. After you sell your relinquished property, you have 180 days to complete your exchange. If you fail to identify and exchange into replacement property within that period, your exchange will automatically fail.
Important Considerations
If you intentionally allow your exchange to fail, there are some important considerations to bear in mind. Most importantly, if you’ve already sold your relinquished property and (before your exchange period is up) decide to back out of the exchange, you will then owe capital gains taxes on the sale of your relinquished property. This can result in a potentially hefty tax bill so it’s important to keep that in mind. If you want to defer your capital gains taxes, you should work to salvage the 1031 exchange and complete everything within your 180 day time period.
Contact a Qualified Intermediary at CPEC1031, LLC
Contact one of the qualified intermediaries at CPEC1031, LLC today to get the help you need with your next like-kind exchange of investment real estate. With over twenty years of experience, our team is here to help you through the ins and outs of the 1031 exchange process with the ultimate goal of deferring your capital gains taxes on the sale of your property. Reach out to our team today to get started with your next 1031 exchange and see how we can make the 1031 exchange process as seamless as possible for you. Our primary office is located in downtown Minneapolis, but we work with taxpayers across the United States.
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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