Are you planning to sell a property and feel uncertain about 1031 Exchange Rules? To help you understand and make the best choices for your situation, David Moore, with IRA Advantage, discusses the ins and outs of both delayed exchanges and reverse exchanges, as well as the deadlines and time frames specific to the 1031 Exchange Options available to you.
How Long Do The 1031 Exchange Rules Give Me To Sell My Property?
It’s sort of a funny question, actually, because if we’re talking about how long you have to sell a property, the only time you would really have any timeline is if we’re talking about a reverse exchange. A 1031 contains timelines, whether we’re talking about delayed exchanges or reverse exchanges. And that is probably the toughest part of any transaction.
On a delayed format – meaning sell first, buy later – you’ve got 45 days from that settlement of the relinquished property to ID what’s going to be acquired, and 180 days to actually receive one or more of those properties you’ve identified. The question asked is, “Well, how long do I have to sell?” And that would maybe assume that we’re talking about a reverse exchange, and in that case, from the date of acquisition in a reverse exchange, you’d have 45 days to ID what’s to be relinquished and 180 days to actually relinquish those properties.
If we’re talking about timelines on a delayed format – how long do you have to sell? – it’s an unlimited time. Really, it’s a question of you finding what you want and making those things happen. The timing is the most critical issue in any 1031 exchange.
Are There 1031 Exchange Options That Give Me More Flexibility?
Well, really, nothing is going to extend the timeline, short of a presidentially-declared national disaster. We can’t extend things out, but maybe instead of doing just a strict reverse exchange, maybe you could tie up a property with a lease option. And the same thing could happen on disposition, so it’s really the trigger timelines and transfer dates. If the benefits and burdens of ownership shift, that’s going to start a hardline time. And as soon as we’re in those hardline time periods, as I said, short of a presidentially- declared national disaster, you’re not going to have extensions. It’s really critical that you get things done in those timelines.
Once again, whether we’re talking about a reverse exchange, you’ve got 45 days from acquisition to ID what’s to be sold, or a delayed exchange, where you’ve got 45 days from that settlement of the relinquished property to ID what you’re going to buy, with a total of 180 days. I guess I should clarify also, it’s 180 days or the due date of the tax return, so if you’re looking at a situation where you’re not going to be completing the transaction before, let’s say, April 15, then you need to file for an extension so you can get things done. That’s one of those sort of sneak-up things that can bite you if you’re not aware.
Years ago, I did have a client, actually a broker, that had a partner. He knew the rules.
He knew what was going on, but his partner ended up filing the return before ever talking to him, before the transaction was completed. And boom, that triggered the end of the 180 days. In that situation, it was the due date of the tax return that triggered the end of the exchange period.
When you are thinking of doing a 1031 Exchange, the sooner you consult the professionals at Equity Advantage, the better. Give David Moore and his team of experts a call today – 503-635-1031!