The successful completion of a 1031 Exchange transaction requires you to comply with certain 1031 Exchange deadlines pursuant to Section 1031 of the Internal Revenue Code, which have been further clarified within Section 1.1031 of the Department 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 period. These 1031 Exchange due dates can not be extended under any circumstances, unless the President of the United States declares a natural disaster area that affects the properties or parties involved with the 1031 Exchange transaction.
When completing a 1031 Exchange transaction you must identify your potential like-kind replacement properties to your Qualified Intermediary (Exeter 1031 Exchange Services, LLC) no later than midnight of the 45th calendar day following the close of the relinquished property sale transaction. For example, if the sale of your relinquished property closed on October 31st the first day of your 45 calendar day identification period would be November 1 and the 45th calendar day identification deadline would be December 15th.
This 1031 Exchange deadline is exactly 45 calendar days, so if the 45th calendar day lands on a Saturday, Sunday or legal holiday, the 1031 Exchange due date is NOT extended to the next business day.
You should plan ahead once you have decided to complete a 1031 Exchange transaction and begin looking for potential replacement property immediately. Your 45 calendar day identification deadline will pass very quickly. You may wish to approach and negotiate with the buyer of your relinquished property for an extention of time to close the transaction in order to provide you with more time to locate and identify suitable like-kind replacement properties.
The formal identification should be made in writing to your Qualified Intermediary (Accommodator) via facsimile, U.S. Mail or overnight courier. Exeter 1031 Exchange Services, LLC maintains a bank of facsimile machines so that clients can submit their like-kind replacement property identification forms 24 hours a day, 365 days a year, via facsimile. Refer to our web page on Identification Requirements for Like-Kind Replacement Properties for more complete information on the identifcation process and requirements.
You can change your mind by formally revoking the identification of your like-kind replacement properties and subsequently submit a new identification form at anytime during your 45 calendar day identification period, but you can not change your mind after the 45 calendar day identification period has expired. Revoking and submitting a new identification form does not change or reset the original 45 calendar day identification deadline.
The act of altering, changing, amending, swapping or back-dating a like-kind replacement property identification form after your 45 calendar day identification deadline has passed in order to save a 1031 Exchange transaction is crimminal income tax fraud, and you should avoid any Qualified Intermediary that engages, permits or suggests any such practice.
Failure to identify like-kind replacement properties within the 45 calendar day window will result in a failed 1031 Exchange transaction and the transaction must be recharacterized as a taxable sale transaction rather than a tax-deferred exchange.
You must complete your 1031 Exchange transaction, which includes the conveyance (receipt) of title to all of your like-kind replacement properties that you intend to acquire, no later than the earlier of:
(1) midnight of the 180th calendar day following the close of the relinquished property sale transaction, or
(2) the due date of your Federal income tax return for the tax year in which the relinquished property was sold, including any extensions of time to file.
You do not need to be concerned about part (2) above unless the first relinquished property transaction sold and closed on or after October 17th and on or before December 31st of any given tax year, which would mean that the 180th calendar day would fall after April 15.
You will have less than 180 calendar days to complete your 1031 Exchange transaction if you have a 1031 Exchange transaction closing on or after October 17th and on or before December 31th of any given income tax year, unless you file for an extension of time to file your federal and, if necessary, state income tax returns. Once the extensions of time have been filed, you must complete your 1031 Exchange transaction within the 180 calendar days before you actually file your Federal and, if applicable, state income tax returns. You will never have more than 180 calendar days to complete your 1031 Exchange transaction.
Exeter 1031 Exchange Services is always available to assist you in navigating through these 1031 Exchange deadlines. You are always welcome to contact any of our 1031 Exchange Specialists at any of our national branch office locations for assistance, to post any question that you may have on our Exeter Discussion Board, or you can reach one of our senior 1031 Exchange Advisors at any time via our Call Exeter 24/7 service.