Many taxpayers have questions about the identification period in a 1031 exchange. In this article, we are going to tackle the question of whether or not you can make changes to your identified replacement property after the 45th day of your exchange.
The quick and easy answer to this question is no. After the 45th day of your identification period, you cannot make any changes to your identified property without cannonballing your exchange. That means you cannot identify new property, or change anything about the property you previously identified. The identification period rule is hard and fast – the IRS doesn’t allow any wiggle room on it.
The strictness of this rule further underlines the importance of planning ahead when it comes to your 1031 exchange. 45 days is not a lot of time. You want to make sure you have all of your ducks in a row before you begin the exchange process. You can also lock in your replacement property first, before selling your relinquished property, by doing a reverse exchange. Whatever you’re considering, it’s a good idea to consult with a qualified intermediary about your options and the best course of action.
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A 1031 Exchange can help you defer capital gains taxes when selling real estate. The best news is that this section of the Internal Revenue Code is available to all United States taxpayers. The qualified intermediaries at Commercial Partners Exchange Company can help you through all the stages of your exchange. Give our intermediaries a call today to learn more about the various services we offer and how we can help you save money on taxes. Our office is located in downtown Minneapolis, but we provide services to clients in many states.