Revisiting the 1031 Exchange Deadlines & Time Limits

1031 exchanges are governed by a list of rules that need to be followed in order to complete a successful exchange. In this article, we are going to discuss the important deadlines and time frames that you need to hit in order to complete a successful 1031 exchange.

180 Days

The most important number to remember for your 1031 exchange is 180. In any 1031 exchange, you have 180 days in total to complete your exchange. That clock starts ticking right after you sell your relinquished property.

There are some exceptions to this rule, but in the majority of exchanges, 180 days is the time frame you have in which to conduct your exchange.

45 Days

The next number to keep in mind is 45. After selling your relinquished property, you have 45 days (the first 45 days of your 180 day exchange period) in which to identify your replacement property in writing.

Exceptions to the Rule

There are a few exceptions to these time rules. For example, if your federal tax filing deadline falls within your 180 day period, your exchange period is shortened to the filing deadline. That is a big potential trap that can sink your exchange. The easiest fix for this is to have your qualified intermediary file for an extension so you can take advantage of your entire 180 days.

Twin Cities 1031 Exchange Company

There are a lot of intricacies that can complicate even the simplest of 1031 exchanges. It’s important to have a qualified intermediary on your team so you make sure that your exchange is executed effectively. At CPEC1031, LLC, our 1031 exchange accommodators have decades of experience helping taxpayers with their 1031 exchanges. If you are interested in deferring the capital gains taxes on the sale of your property, consider a like-kind exchange under section 1031. Contact our Twin Cities qualified intermediaries today to get started with your like-kind exchange of 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.

© 2021 Copyright Jeffrey R. Peterson All Rights Reserved

The Deadlines that Govern 1031 Exchanges

There are many rules that you have to abide by when exchanging property in a 1031 transaction. In this article, we are going to talk about the deadlines that govern 1031 exchanges of real property.

1031 Exchange Deadlines

With any 1031 exchange of real estate, there are two deadlines in particular that you need to pay attention to. Your overall deadline to complete your exchange is 180 days, beginning when you sell your relinquished property. You have the first 45 days of that period to identify your replacement property in writing.

Exceptions to the Rule

There are a few exceptions to these timing rules. The biggest exception comes when your federal tax filing deadline falls within your 1031 exchange window. In this situation, you have until your tax filing deadline (April 15 for individuals, March 15 for businesses) to complete your exchange – rather than the full 180 days. This is because the IRS wants both your replacement property and your relinquished property reported on the same tax return. This is a common trap that many aren’t aware of, and it can potentially derail your exchange so you need to be cognizant of this rule. If you have timing issues, you can always file for an extension to give yourself a little more breathing room.

Qualified Intermediaries in Minnesota

1031 exchanges are a great tool that allows you to defer your capital gains tax when selling real estate. At CPEC1031, we help clients facilitate 1031 exchanges of real estate. Our qualified intermediaries can walk you through each step of your exchange – preparing your documents and answering all of your questions along the way. Contact us today at our downtown Minneapolis office to chat with a Minnesota qualified intermediary about your 1031 situation.

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

Breaking: IRS Extends 1031 Exchange Deadlines

In response to the ongoing COVID-19 pandemic, yesterday, the IRS published Notice 2020-23, which appears to extend important 1031 exchange deadlines.

According to the Notice, if an exchangor's 45-day identification period or 180-day exchange period ends between April 1 and July 15, 2020, then their deadline may be extended until July 15, 2020.

This unusual response from the IRS may be welcome news for taxpayers conducting 1031 exchanges. However, there are a few things that the Notice leaves unclear, such as:

• Whether this relief applies only to 1031 exchangors who still have their exchange proceeds with a qualified intermediary. If an exchangor has already received their proceeds from the intermediary, do they have the option of continuing their exchange now that the deadlines have been extended? For example, if an exchange started on October 5, 2019, and the standard 180-day exchange period ended on April 2, 2020, and the intermediary has returned unused funds to the exchangor, can the exchangor nevertheless continue the exchange under the extended time frames until July 15, 2020, notwithstanding that they've received their funds back?

• Whether this extension is elective or automatic. Does this automatically extend all 1031 exchange deadlines to July 15? What if a taxpayer doesn't wish to extend their deadline that far? Do they have a choice? For example, if an exchangor identified a hotel as their replacement property, which is now unoccupied and undesirable as a purchase because of the coronavirus, and the exchangor has elected not to purchase this replacement property, are they now required to wait until July 15 to get their unused funds back from an exchange that they've decided to forego?

• What does this mean for taxpayers starting new exchanges? For people starting new exchanges on or after April 9, 2020 (when the IRS Notice 2020-23 was released), the extension may push back the date on which their replacement property identification deadline is due. For example, if you close on your relinquished property on April 10, typically, your 45-day identification period ends at midnight on May 25, 2020. Still, with the new extension, July 15 appears to be the new deadline for identification.

We are actively investigating these and other issues so that we can understand how to guide our clients through their 1031 exchanges. As always, I am available to start the conversation at 612.643.1031. I thank you and look forward to continuing the exchange.

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved