1031 Tax Exchange Rule

There are a number of rules governing 1031 exchanges, as well as various tips and techniques to make transactions go more smoothly and reduce the chance of inadvertent taxable gains. Those wishing to complete 1031 exchanges should always make sure they have done their own due diligence and consulted their advisors about properly structuring their transactions. That said, the most important rules governing 1031 exchanges have to do with deadlines.

In our experience at TM 1031 Exchange, the most common cause of a failed 1031 exchange is the inability to meet deadlines. Not only must replacement property be properly identified in writing within 45 days of the close of sale for the relinquishing property, but closing deadlines apply to the purchase of the replacement property. In general, the investor has a maximum of 180 days to complete acquisition of the replacement property.

However, this rule is complicated by tax filing deadlines. If the taxpayer's tax due date occurs before the 180 days have expired, the acquisition must be completed earlier. For example, if the relinquished property was sold on November 24 and the investor's taxes are due on April 15, the taxpayer would have less than 180 days to take title to the replacement property. Filing an extension, though, can extend the deadline so that the investor has 180 days once again.

TM 1031 Exchange exists partly to help investors and sellers meet IRS timing requirements. Our nationwide database of investment grade properties helps our clients locate suitable properties in a timely manner. For more information or to register for our services, call us toll free at 1-877-4TM-1031. You may also send an email info@tm1031exchange.com.