What are the time limits to complete a Section 1031 Exchange?

While a like-kind exchange does not have to be a simultaneous swap of properties, you must meet two time limits or the entire gain will be taxable. These limits cannot be extended for any circumstance or hardship except in the case of presidentially declared disasters.

The first limit

You have 45 days from the date you sell the relinquished property to identify potential replacement properties. The identification must be in writing, signed by you and delivered to a person involved in the exchange like the seller of the replacement property or the qualified intermediary. However, notice to your attorney, real estate agent, accountant or similar persons acting as your agent is not sufficient.

Replacement properties must be clearly described in the written identification. In the case of real estate, this means a legal description, street address or distinguishable name. Follow the IRS guidelines for the maximum number and value of properties that can be identified.

The second limit

The replacement property must be received and the exchange completed no later than 180 days after the sale of the exchanged property or the due date (with extensions) of the income tax return for the tax year in which the relinquished property was sold, whichever is earlier. The replacement property received must be substantially the same as property identified within the 45-day limit described above.

By |2018-07-02T17:14:48+00:00July 2nd, 2018|

About the Author:

Daniel is a veteran finance and real estate professional with more than 12 years of experience. His background working for large financial institutions has provided him with invaluable perspectives on capital raising, fund management, entrepreneurship, risk management, and alpha generation. As Director of Origination at Wilshire Quinn Capital Inc., Daniel works closely with mortgage brokers and borrowers to structure hard money loan deals. Daniel's attention to detail, negotiation skills, personality, and business acumen allow him to think creatively, execute quickly, and provide a high level of service to his clients. Daniel grew up in Long Island, New York, and has been living in San Diego for the past seven years. Daniel’s hobbies include playing ice hockey and acting as a referee for the sport. Daniel also practices the bass guitar and plays gigs with local bands around town.