Do you really have 180 days to close on that Section 1031 swap?
One of the nastier land mines in the tax law is the
deadline for closing on a purchase in a deferred "like-kind
exchange." When you have a
deferred exchange, Section 1031
gives you 45 days to identify the property you want to receive in the
swap. The deadline for actually closing on the replacement property is
the sooner of:
- 180 days after giving up the property, or
- The due date of the tax return for the year in which the exchange was entered into.
This means if you entered into an exchange after Oct. 18, 2008, you need to either close on your replacement property by April 15 (or March 15, if your corporation did the exchange).
Fortunately, the tax law gives you a simple way to get your full 180 days to close your exchange, extending your return. If your return is due before the 180 days runs out, an extension gives you the full 180 days.
But be careful. If you file your 1040 before April 15 an extension doesn't count. Don't be in such a hurry for your refund that you make your like-kind exchange taxable.
You can learn more about exchanges at this IRS site.
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