Tuesday, September 29, 2009 at 12:03PM | Staff Need More Than 180 Days to Complete Your 1031 Tax Deferred Exchange?
I briefly discussed the fact that real estate investors who are in the middle of a 1031 Exchange can not apply for or be granted an extension of time to complete their 1031 Tax Deferred Exchange transaction in a prior last blog post here on The 1031 Exchange Institute.
1031 Exchange Deadlines
Your 1031 Exchange must be completed within the prescribed deadlines contained in Section 1031 of the Internal Revenue Code, which means that you must acquire and receive title to your like-kind replacement property no later than 180 calendar days from the date that you closed on your relinquisehd property.
Exception to the 1031 Exchange Deadlines
The only exception to this is when the President of the United States has declared a natural disaster and the IRS further identifies the geographic areas affected by the natural disaster area. The real estate investor may qualify for an extension of time to comply with his 1031 Exchange deadlines if his or her relinquished property or replacement property are located within the disaster area, or they themselves are located within the disaster area or their records are located within the disaster zone.
Advanced 1031 Exchange Strategy
However, it may be possible to have up to 360 calendar days to complete your over all Tax Deferred Exchange strategy by combining a Reverse 1031 Exchange and a Forward 1031 Exchange. Now, this can be a little misleading at first reading, and there are many articles and blog posts that also mislead the reader by offering more than 180 calendar days to complete their 1031 Tax Deferred Exchange.
So, let me explain what I mean by it might be possible to have up to 360 calendar days to complete your 1031 Exchange. This advanced 1031 Exchange strategy involves not one (1) but two (2) 1031 Exchange transactions by combining a Reverse 1031 Exchange with or into a Forward 1031 Exchange so that the real estate investor would have 180 calendar days to complete the Reverse 1031 Exchange and 180 calendar days to complete the Forward 1031 Exchange for a total possible 1031 Exchange period of 360 calendar days.
The real estate investor would either start off with a Reverse or Forward 1031 Exchange followed by either a separate but integrated second Reverse or Forward 1031 Exchange.
There is no extension of time or single strategy where by one (1) 1031 Tax Deferred Exchange transacton has more than 180 calendar days by itself. It requires more advanced planning by combining at least two (2) separate 1031 Exchanges into an integrated transaction.
Advanced 1031 Exchange Webinar
We actually go over this in much greater detail in our free Advanced Reverse 1031 Exchange Webinar that we host once each month. You are more than welcome to register and attend as our guest. This webinar assumes that you have completed both Reverse and Forward 1031 Exchanges.
