When we speak of a 1031 tax exchange – we are typically talking about a Deferred Exchange.
In a Deferred Exchange a taxpayer conveys (or sells) the old relinquished-property on day zero of the exchange timeline, and then has up to 180 days after that date (or the due date of the taxpayer’s federal income tax return, including extensions, whichever occurs first) to receive the replacement property.
In legal terms, the conveyance must be part of an integrated, interdependent, mutual, and reciprocal-plan, intended to effectuate an exchange by the taxpayer of like-kind property pursuant to the 1031 rule.
To help you understand this process – observe this timeline which demonstrates that both the 45 day time-period and 180 day time-period run concurrently.
1031 Deferred Exchange Timeline
The replacement property must be received within the earlier of:
- 180 days after the closing of the relinquished-property.
- The due-date for your tax return for the taxable year in which the transfer of the relinquished property occurs (including extensions).
Contact a Commercial Title Company
A commercial real estate transaction can be complex and daunting for many. Having a trusted commercial title company by your side throughout the process can help make things go a lot smoother. Give us a call to discuss the specific details of your commercial transaction. Our main office is located in the heart of downtown Minneapolis but we work with clients across the United States. No matter where your property is located, we can help you through the entire commercial real estate transaction.