Many people know that they have 45 days to identify their property in a 1031 exchange. But there is confusion about how that 45 day identification period interacts with the 180 day exchange period. Does the taxpayer have 180 days after the 45 day identification period?
The answer to that is no. You only have 180 days total from the start of your exchange to the finish. The 45 day identification period runs concurrently with that 180 period.
If your due date for the filing of your federal income tax return pops up within that 180 day period, the IRS shortens your exchange period to the due date of your tax return. So if you start your exchange on December 28, and you file on April 15, you’re not going to get the full 180 days to complete your exchange. The best course of action in this situation is to file an extension on your tax return. This is why it’s important to let all parties involved in your exchange the details at every step of the process.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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