The end date, also known as the closing date, is a critical aspect of a 1031 exchange as it marks the final deadline for the exchange to be completed. This date is determined by the investor and the intermediary and must be adhered to in order for the exchange to be valid and qualify for tax deferment.
It’s important to note that the end date can also be extended in certain circumstances, such as when the investor is using a “reverse exchange” or a “construction exchange.” In a reverse exchange, the replacement property is acquired before the relinquished property is sold, and the replacement property is built or improved in a construction exchange. In these cases, the end date can be extended to allow for the completion of the construction or improvement of the replacement property.
- The end date, also known as the closing date, marks the final deadline for completing the exchange.
- The end date is determined by the investor and the intermediary and must be adhered to in order for the exchange to be valid and qualify for tax deferment.
Sarah is selling a property and wants to use a 1031 exchange to purchase a replacement property. She works with an intermediary to determine the end date for her exchange. The end date is 180 days after the sale of her relinquished property, giving her the necessary time to identify and purchase the replacement property.
- Plan ahead and set the end date well in advance to ensure you have enough time to complete the exchange.
- Make sure you have all the necessary documentation and paperwork to close on the replacement property before the end date.
It’s important to be aware that strict timelines must be followed in a 1031 exchange, and missing the end date will result in a disqualification of the exchange and a loss of tax deferment.
The end date is a critical aspect of a 1031 exchange and must be adhered to in order for the exchange to be valid and qualify for tax deferment. It’s important to plan ahead, set the end date well in advance, and have all the necessary documentation and paperwork to close the replacement property before the end date. It’s also crucial to be aware that strict timelines must be followed; missing the end date will result in a disqualification of the exchange and loss of tax deferment.
