A typical 1031 Exchange to defer taxes: 45 Days to identify the NEW Property, 180 Days to Close on said Property
HOWEVER – For Exchanges started between Oct. 18th and Dec. 31, the timeline to complete (above) is and can be shortened!
The Tax Code states the new Replacement Property must be purchased by the EARLIER of two possible dates:
1.) 180 days after the date the Relinquished Property is transferred in the Exchange
2.) The due date of the taxpayers return for the taxable year in which the Relinquished Property is transferred
WHAT DOES THIS MEAN!? – The means that a taxpayer who sold real estate and began a 1031 Exchange after October 18th, 2022,
MUST close on the new replacement property by the due date of their 2022 Tax Return, which is APRIL 17, 2023.
LASTLY: To get the full 180-day period, the taxpayer must file a tax extension for their entire tax return.
I hope this helps with any investors or Exchangers that you are currently working on. Me and my agency are here to help with the closing and facilitate the 1031 Exchange if needed! We would be thrilled to have the chance to work with you and we are always here to serve you and your client.
Disclaimer – Please note, I am not a licensed CPA/Accountant