The beginning date for a 1031 exchange is when the investor transfers their original property, also known as the “relinquished property.” From this date, the investor has 45 calendar days to identify one or more potential replacement properties. The investor must then complete the exchange within 180 calendar days of the transfer of the original property or by the due date (including extensions) of their federal income tax return for the tax year in which the transfer occurred, whichever is earlier.
One of the key aspects of a 1031 exchange is the beginning date, which is the date on which the investor must identify the replacement property or properties.
1031 exchange would be an investor who owns a rental property and wants to swap it for a different rental property. The investor would transfer the original property on the beginning date and have 45 days to identify one or more potential replacement properties. They would then have 180 days to complete the exchange and acquire the new rental property without paying capital gains taxes on the sale of the original property.
It’s important to note that the replacement property must be of “like-kind” to the original property, meaning it must be used for the same purpose, such as for investment or for use in a trade or business. Additionally, the replacement property must be of equal or greater value than the original property, and the investor must not receive cash or other non-like-kind property as part of the exchange.