If your 1031 exchange is not complete by the due date for your tax return, you may need to file for an extension.
The time frame you have to complete the acquisition of your replacement property ends at midnight on the earlier of the 180th day after the date you transferred the relinquished property OR the due date (including extensions) for your income tax return for the taxable year in which the transfer of the relinquished property occurs. (U.S. Treasury Regulations section 1.1031(k)-1(b)(2)).
This means, if the 180th day following the closing of your first relinquished property falls after the due date for your 2021 tax return (for example, for many individuals, April 15, 2022) you must file an application for extension of time with the IRS to extend the due date in order to have all 180 days to acquire the replacement property. If you do not file for an extension, you will NOT be able to acquire any replacement property in your exchange after your tax return due date. Taxpayers may have different tax return due dates.
If you have any questions, please contact your tax advisor.
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If you’re considering a 1031 exchange, you want a team of professionals on your side. Let the experts at Equity Advantage help you navigate the details. Call them today! 503-635-1031.