Important information for investors beginning a 1031 exchange from October 18 – December 31, 2013
The time frame an exchanger has to complete the acquisition of a replacement property in a 1031 exchange ends at midnight on the earlier
of the 180th day after the date the relinquished property was
transferred – or – the due date (including extensions) for the income
tax return for the taxable year in which the transfer of the
relinquished property occurs. Section 1031(a)(3)(B).Even though an exchanger may be entitled to a filing extension, to extend the 180-day period the exchanger must actually obtain the filing extension. Consequently, some exchangers closing on the sale of relinquished property late in 2013 may need to file for an extension to utilize the entire 180 -day exchange period. As a general rule, exchangers should not file a tax return until the 1031 exchange is complete.
More specifically, if the 180th day following the closing of the sale of the first relinquished property falls after the due date for filing the 2013 tax return (generally April 15, 2014 for individuals), an exchanger must file IRS Form 4868 with the IRS to actually extend the filing date. If an exchanger does not file for such an extension, they will not be able to acquire any replacement property in an exchange after the tax return due date.
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