Understanding the Critical Deadlines
Successfully completing a 1031 exchange transaction requires strict adherence to two (2) critical deadlines outlined in Section 1031 of the Internal Revenue Code and Section 1.1031 of the Treasury Regulations. The 1031 exchange deadlines consist of the 45-calendar day identification deadline and the 180-calendar day (or less) 1031 exchange completion deadline:
- 45-Calendar Day Identification Period: Investors must identify one or more potential replacement properties within 45 calendar days after the sale of their relinquished property closes.
- 180-Calendar Day Exchange Period: The entire 1031 exchange must be completed within 180 calendar days after the sale of the relinquished property closes.
These 1031 exchange due dates cannot be extended under any circumstances. Failure to meet these deadlines will result in a failed 1031 tax deferred exchange, leading to taxable gains on the sale of the relinquished property.
The 45-Calendar Day Identification Period
- Deadline Specifics: The 45-calendar day period begins the day after the sale of your relinquished property closes. For example, if your sale closes on October 31st, the identification deadline is 45-calendar days later or December 15th.
- No Deadline Extension: If the 45th calendar day falls on a weekend or holiday, the tax-deferred exchange deadline is not extended to the next business day.
- Identification Process: The identification of one or more replacement properties must be submitted in writing to your qualified intermediary, such as Exeter 1031 Exchange Services, LLC (Exeter1031™) via confirmed email, fax, U.S. mail, or nationally recognized courier. Exeter1031™ offers 24/7 support to assist investors with this process.
- Changing the Identification: Investors can revoke or amend their identification of replacement property notice within their 45-calendar day identification period, but not afterward. Altering or backdating identification forms after the deadline is considered tax fraud.
The 180-Calendar Day Exchange Period
- 1031 Exchange Deadline: The 1031 tax deferred exchange must be completed by the earlier of:
- Midnight of the 180th calendar day after the sale of the relinquished property closed; or
- The due date of the taxpayer’s federal income tax return for the year in which the sale occurred, including extensions.
- Tax Return Considerations: If the sale of the relinquished property closes on or after October 17th and on or before December 31st, the taxpayer may need to file for an extension of time to file their tax returns to utilize the full 180 calendar day exchange period.
Why These Deadlines Matter
Missing either deadline will result in a failed 1031 exchange, requiring the taxpayer to report the sale of their relinquished property as a taxable sale. Consult your tax advisor to explore options for offsetting taxable gains in such cases.
Support from Exeter1031™
Exeter1031™ is here to guide you through the complexities of 1031 exchange deadlines. Our 1031 exchange specialists are available 24/7/365 to answer your questions and ensure a smooth exchange process.