1031 Exchange rules

When is 180 days not really 180 days?  Read the rules carefully, and you’ll see where your deadline could come up faster than you expected. 

Closing on all replacement property must be completed by the earlier of:

 

(a) 180 days (the date set out above) following the transfer of your relinquished property; or:

(b) The due date for your federal income tax return (including extensions) for the year in which your property was relinquished (or in the event of multiple exchanged properties, for the year in which the first such property was relinquished).

 

If your relinquished property was transferred before October 17 (in years which are not Leap Years), the 180-day period would end before the due date of your tax return, April 15.

 

If your relinquished property was transferred after October 17 but before the end of the year, your income tax return would be due April 15. This would be the deadline for receiving all replacement property, even though it is less than 180 days. If you want to have the full 180 days, you must request an automatic extension of time to file your return. Consult your accountant in ample time to have a request for extension filed on your behalf. It must be filed to receive the full 180 days.

 

If your exchange is in the form of an entity such as a partnership or corporation, it is important to know the due date for tax returns for that entity, so an extension can be requested if necessary.

Be careful with these dates, and feel free to download the checklist below as a helpful reminder of what needs to be done to complete a 1031 exchange.  Call John Garrett for more details or with your questions 573-302-2320.

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