While the IRS does not stipulate specific holding rules, many tax advisors recommend holding the property for at least 12 months before engaging in an exchange. It's important to understand that the duration of property ownership is just one aspect the IRS considers when evaluating the validity of a 1031 Exchange. Equally significant is demonstrating the intent to hold the property for business or investment purposes.
The properties to be acquired must be identified and delivered by midnight on the 45th day following the close of the relinquished property. Additionally, all replacement properties must complete escrow by midnight on the 180th day following the close of the relinquished property. Generally, the 45-day and 180-day limits cannot be extended, but the IRS may grant extensions for areas affected by natural disasters. Your accommodator will provide the most up-to-date information on limit extensions, and you can find an example of an IRS-issued extension here.
It's crucial to complete the exchange by the tax filing date of April 15th, unless a taxpayer files for an extension to submit federal and state tax returns. Once the time extensions have been filed, the 1031 exchange transaction must be finalized within the 180 days before actually filing your Federal and state income tax returns.E 1031 Exchange Various Buttons
I agree to terms & conditions provided by the company. By providing my phone number, I agree to receive text messages from the business.
All Rights Reserved. Copyright 2025.