Phase 1 Closing After October 17th? Important Exchange Timeline Considerations
For most exchanges, Section 1031 of the Internal Revenue Code allows investors 180 days to complete a 1031 Exchange, from the time the Phase 1 relinquished property closes until the Phase 2 replacement property closes.Section 1031 also requires that all exchanges be complete prior to the filing of the tax return for the year in which the Phase 1 property sold. If the Phase 2 replacement property has not been acquired, taxpayers should not file their income tax return for the year until such closing occurs and the exchange is complete.
We advise that all investors commencing an exchange late in the year be aware of the requirement that all exchanges begun in 2006 must be completed prior to the filing of their annual 2006 income tax return. And for investors who commence their exchange after October 17th, they may have less than 180 days to complete their exchange, because there are less than 180 days between October 17th, 2006 and April 15, 2007.
Contact your cpa for more information.